With the Japanese industry group betting on the US market to promote its next phase of growth, Hitachi is expected to set off a wave of infrastructure spending and a recovery in manufacturing under the leadership of the Biden administration.
The group’s new president Keiji Kojima said that Hitachi will hire more digital talents from India to compete in the United States. $9.5 billion in transactions Acquired GlobalLogic, a software engineering company headquartered in Silicon Valley.
“In general, we think the biggest opportunity lies in North America. We believe that a large part of the industry, including manufacturing, will return to North America,” Kojima, who was appointed last week, told reporters.
After years of hard work, by merging and selling listed subsidiaries, Hitachi has transformed this huge Japanese conglomerate into an IT and infrastructure expert, and Hitachi will focus on the United States.
As the asset restructuring plan is nearing completion, Kojima stated that “the next 10 years will be a decade of growth” because the group’s goal is to expand its software business Lumada on a global scale.
The company will increase its investment in the United States because President Joe Biden launched his $1 trillion infrastructure planBiden has been promoting support for manufacturing to help semiconductor companies produce more products in the United States.
Hitachi said in May that its wholly-owned subsidiary Hitachi High-Tech will establish a Semiconductor Research Institute In Oregon, all of its American chip technology will be concentrated there.
The group has not disclosed how much it will spend on the new facility, but Kojima said that as the Biden administration increases spending to strengthen its supply chain, it will establish a “close partnership” with American semiconductor companies.
North America is already Hitachi’s largest market outside of Japan, accounting for 13% of its annual revenue.
Prior to the acquisition of GlobalLogic, Hitachi acquired Michigan-based industrial robot integrator JR Automation for $1.4 billion in 2019. The Japanese group has stated that it hopes to increase the revenue of its companies in this sector of North America to 200 billion yen ($1.8 billion) in the current fiscal year, up from 73 billion yen three years ago.
Analysts said that Kojima’s challenge will be to oversee the integration of GlobalLogic, an expensive effort to digitize its hardware assets while expanding Hitachi’s software business. Compared with global peers such as Siemens and ABB, the group’s 6% operating profit margin is also still low.
“We still have a lot of product businesses, so we need to use GlobalLogic’s digital resources to innovate Hitachi’s products,” said Kojima, who was responsible for the creation of Lumada.
He added that the company may make additional acquisitions in railway and healthcare businesses to fill the gap in digital capabilities.