Hitachi is anticipating a wave of infrastructure spending and a return of manufacturing under the Biden administration, as the Japanese industrial conglomerate bets on the US market to drive its next phase of growth.
Keiji Kojima, the group’s new president, said Hitachi would hire more digital talent from India to compete in the US following a $9.5bn deal to buy GlobalLogic, a Silicon Valley-based software engineering company.
“As a whole, we believe the biggest opportunity lies in North America. We believe a large part of industries, including manufacturing, will return to North America,” Kojima, who was appointed last week, told reporters.
Hitachi’s US focus comes after years of efforts to transform the sprawling Japanese conglomerate into an IT and infrastructure specialist by merging and selling listed subsidiaries.
With the asset restructuring programme nearly complete, Kojima said “the next 10 years will be a decade of growth”, as the group aims to expand its software business Lumada worldwide.
The company will increase investment in the US, as President Joe Biden rolls out his $1tn infrastructure plan. Biden has pushed for support for the manufacturing industry to help semiconductor companies produce more goods in the US.
Hitachi said in May that its fully owned subsidiary Hitachi High-Tech would establish a semiconductor research facility in Oregon, where all of its US chip technology would be centralised.
The group has not disclosed how much it will spend on the new facility, but Kojima said it would have a “tight partnership” with US semiconductor companies, as the Biden administration increases spending to strengthen its supply chain.
North America is already Hitachi’s largest market outside of Japan, accounting for 13 per cent of its annual revenue.
Before acquiring GlobalLogic, Hitachi bought JR Automation, a Michigan-based industrial robotics integrator, for $1.4bn in 2019. The Japanese group has said it wants to increase revenue from its companies in this industry segment in North America to ¥200bn ($1.8bn) in the current financial year, a rise from ¥73bn three years ago.
Analysts said Kojima’s challenge would be to oversee the integration of GlobalLogic, an expensive endeavour to expand Hitachi’s software business while digitising its hardware assets. The group’s operating profit margin of 6 per cent also remains low compared with global peers such as Siemens and ABB.
“We still have a lot of product businesses, so we need to innovate Hitachi’s products by using the digital resources of GlobalLogic,” said Kojima, who oversaw the creation of Lumada.
He added that the company might carry out additional acquisitions in railway and healthcare businesses to fill gaps in digital capability.