TOKYO -- Japan's Hitachi plans to raise its annual research and development budget to around 500 billion yen ($4.17 billion) starting in fiscal 2016, a level comparable with rival industrial conglomerates General Electric and Siemens.
This would mark an increase of more than 30% from projected outlays for the year ending next March. The additional money would go into areas such as sensors, artificial intelligence and robotics.
"We will step on the accelerator," Chief Technology Officer Keiji Kojima said.
R&D spending is to reach 4-5% of revenue under Hitachi's yet-to-be-announced business plan for the three years from fiscal 2016, Kojima said, up from the fiscal 2013 level of 3.7%.
The plan appears to contain a goal of lifting revenue to 11 trillion yen, which means annual R&D spending could reach about 500 billion yen for the first time since fiscal 1997, when it was focused mainly on semiconductors. For the current fiscal year, Hitachi expects to spend about 360 billion yen, a rise of only about 3% from fiscal 2014.
The group is pushing into new business fronts where information technology melds with infrastructure like railroads and power grids. As part of this effort, Hitachi plans to triple development spending in areas such as AI, sensors, robotics and security, Kojima said. Examples of intelligent infrastructure include using sensors and AI to constantly monitor the condition of rail equipment or solar panels. Machines also may be used to track and analyze customer behavior in stores.
Hitachi also plans to increase its R&D staff by 15% to around 3,000. This buildup will focus on the Global Center for Social Innovation, which seeks to develop business ideas in collaboration with customers and has overseas locations in the U.S., Europe and China.
GE, an American peer against which Hitachi often measures itself, spent $5.27 billion in its fiscal 2014. Siemens of Germany spent 4.1 billion euros ($4.62 billion).
Japanese R&D revival continues
Since 2010, corporate R&D spending in Japan has recovered from the drastic cutbacks made in the aftermath of the global financial crisis.
Fiscal 2015 R&D budgets at 35 companies that had revealed their plans as of May 1 totaled 2.75 trillion yen, up 6% from the previous year. That is roughly the same amount as in 2007, the peak for the past decade.
Export-driven earnings growth is encouraging electronics manufacturers and automakers to channel more money into innovation. Panasonic plans to raise R&D spending 3%, mostly in automotive electronics. NEC is budgeting an 8% increase spread over advanced network technology and other areas. Automakers are seeking to hone their edge in safety and environmentally friendly engines. Honda plans a 9% jump in R&D.