Hitachi and Microsoft to drive business and social innovation with AI

• The three-year, multi-billion-dollar strategic partnership will be focused on creating innovative industry solutions that will drive transformational change for business and society.
• Hitachi Group will incorporate Microsoft Cloud, Azure Open AI Service, Dynamics 365, Copilot for Microsoft 365, and GitHub Copilot into its Lumada solutions to accelerate the growth of its Lumada business and improve the productivity of its 270,000 employees.
• Hitachi will train more than 50,000 “GenAI professionals” with advanced AI skills. As part of the partnership, Hitachi will incorporate training provided by Microsoft into its own training.

REDMOND, Wash., June 3, 2024 / TOKYO, June 4, 2024 — Hitachi, Ltd. (TSE: 6501) and Microsoft announced plans for a multi-billion-dollar collaboration over the next three years to accelerate social innovation through generative AI. Through this strategic alliance, Hitachi is expected to drive growth in its Lumada business, with projected revenue of 2.65 trillion yen ($18.9 billion).^*1 The company will promote business efficiency and productivity improvements for the Hitachi Group's approximately 270,000 employees by fiscal 2024.

Specifically, Hitachi will incorporate Microsoft's cloud, Azure Open AI Service, Dynamics 365, Copilot for Microsoft 365, and GitHub Copilot into its Lumada solutions to provide innovative solutions for industries such as energy and mobility, contributing to the development of companies and society. In addition, the two companies will promote joint projects to meet urgent business needs, such as strengthening cloud services, which are attracting attention as the use of generative AI expands, strengthening security, and reducing the environmental impact of data centers.

“Hitachi is investing 300 billion yen ($2.1 billion) as it transforms by applying AI across the Hitachi Group to improve productivity.^*1 Hitachi and Microsoft will join GenAI to capture new growth opportunities in fiscal year 2024. The two companies are working on various co-creation projects, including the development of next-generation digital solutions in the manufacturing and logistics fields.^*2 Hitachi President and CEO Keiji Kojima said, “Hitachi has collaborated in a variety of fields, including providing AI solutions to resolve social issues by combining AI and IoT, and developing the field-extended metaverse that runs on Microsoft Teams. With this agreement, we will expand our efforts into social infrastructure fields such as energy and mobility, and by applying generative AI, we hope to further accelerate social innovation by improving on-site productivity, which will become increasingly important in the future. By combining the strengths of both companies, we hope to contribute to resolving the issues faced by our customers and society, and contribute to realizing a more sustainable future.”

“We are ushering in a new era of AI with the promise of powering transformative business outcomes for every job and industry,” said Satya Nadella, chairman and CEO, Microsoft. “Our expanded partnership with Hitachi brings together the power of the Microsoft Cloud, including Microsoft Copilot, with Hitachi's industry expertise to improve productivity for Hitachi's 270,000 employees and help solve our customers' biggest challenges, including sustainability.”

Hitachi's Business Transformation:

Hitachi's Generative AI Center^*3 Hitachi and Microsoft will collaborate to improve operational efficiency and application development within the Hitachi Group by utilizing Copilot for Microsoft 365 and GitHub Copilot. Hitachi will also utilize Azure OpenAI Service to enhance customer service. As part of Hitachi's group-wide transformation, Hitachi will combine Azure OpenAI Service and GitHub Copilot with Hitachi's system development expertise to maintain high quality and improve productivity in mission-critical system development. Hitachi's internal verification confirmed that by combining Hitachi's detailed system design knowledge with Microsoft Azure OpenAI Service and GitHub Copilot, application source code can be generated correctly 70% to 90% of the time, resulting in high-quality output.^*Four

Hitachi Rail is using GenAI for predictive maintenance to enhance asset monitoring and improve forecast accuracy. This proactive approach helps prevent breakdowns, improve service quality, reduce operational costs, and increase safety. For example, they are using Microsoft Azure's cloud-based platform to streamline data visualization and analysis, providing AI-driven data-driven insights to digitally monitor rail infrastructure. These insights are then translated into actionable steps for Network Rail to enhance predictive maintenance decision-making for overhead lines.

Develop innovative digital solutions

Hitachi is strengthening its Lumada solutions by incorporating generative AI functions. As part of this, the company has begun using Microsoft's “generative AI” in “JP1 Cloud Services,” a SaaS version of the integrated operations management software “JP1,” which has approximately 20,000 customers. This will shorten the time it takes to respond to problems in IT departments, financial institutions, public institutions, and other organizations, and improve business efficiency. In internal proof-of-concept tests conducted so far, it has been confirmed that the time it takes for an operator to initially respond to an alert can be reduced by approximately two-thirds by using generative AI to respond to alerts and displaying the source of the response, such as a manual.

In addition to this, Hitachi and Microsoft will also support the energy transition by improving access to and enhancing digital solutions for asset performance management, energy trading and risk management, reducing downtime and increasing profitability. Increased computing power and cloud infrastructure are essential to scaling these applications. Hitachi Energy's enterprise software solution technologies and partnership with Microsoft will be key to optimizing energy networks from generation to transmission and distribution, ultimately delivering reliable and sustainable energy to customers.

Collaborative projects to promote sustainable growth

Hitachi group companies, including GlobalLogic, Hitachi Digital Services and Hitachi Solutions, offer a wide range of digital engineering, IT and managed services and application services for the cloud, and further development efforts through this partnership will be focused on enhancing this wide range of services with the aim of sustainable innovation with Microsoft.

As the impact of CO2 emissions from AI on the global environment increases, Hitachi and Microsoft will work together to achieve zero carbon emissions to reduce the environmental burden, starting with the European datacenter project.

Strengthening digital skills and workforce development

Hitachi will train more than 50,000 GenAI professionals. In addition, this partnership will incorporate training in advanced software development skills using GitHub Copilot and Azure OpenAI Service into the program, and will develop “GenAI professionals” who will support customers' transformation using AI.

*1 Forecast as of April 26, 2024. Calculated at 140 yen per US dollar.

*2 Hitachi News Release (June 26, 2020) “Hitachi and Microsoft Form Strategic Alliance to Promote Next-Generation Digital Solutions for Manufacturing and Logistics in Southeast Asia, North America and Japan”

https://www.hitachi.com/New/cnews/month/2020/06/200626.html

*3 Hitachi News Release (May 15, 2023) “Hitachi Establishes Generative AI Center to Promote the Use of Generative AI and Accelerate Value Creation and Improve Productivity in Lumada Business”

https://www.hitachi.com/New/cnews/month/2023/05/230515.html

*4 Hitachi News Release (May 21, 2024) “Hitachi Accelerates System Development Transformation with Generative AI” https://www.hitachi.com/New/cnews/month/2024/05/240521.html

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