Hitachi
Social Innovation
Business

Feature: Four Focus Business Domains

An Innovation Partner for
the IoT Era
Accelerating the Pace of Collaborative Creation with Customers in theEver-Evolving Social Innovation Business
Four Focus Business Domains

Power/Energy

Industry/Distribution/Water

Urban

Finance/Social/Healthcare

Main Products and Services

Main Products and Services

Main Products and Services

Main Products and Services

Nuclear power
generation systems

Manufacturing andlogistics systems

Elevators/Escalators

Renewable energy power
generation systems

Water treatment systems

Automotive parts

Industrial machinery

Air-conditioning equipment/
Consumer electronics

Transmission &distribution systems

Railway systems

Systems forfinancial institutions
IT systems for social
infrastructure operators (power,transportation, other)
Systems for public authorities
Medical equipment
and systems

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Power/Energy
In the Power/Energy domain, leveraging Hitachi’s strengths in operational technology (OT), IT, and products,
we provide power generation systems, transmission & distribution systems, and other solutions to a diverse
range of customers across the energy value chain spanning production, distribution, and consumption.
We are achieving social innovation by tackling issues in the constantly changing energy market, based on
applying our extensive knowledge and advanced technology.
Kamisu Offshore Wind Farm No. 1
Wind Power Ibaraki Co., Ltd.

Future Growth Drivers of the BusinessWind Turbines
Wind turbines are an excellent source of renewable energy that provide a solution toresource depletion and global warming, while also supplying energy to local or regional
areas in ways that meet community needs and help realize a recycling-basedsustainable society. Hitachi’s downwind turbines are designed for harsh weather
conditions with frequent bouts of high wind. They capture upward-blowing winds
efficiently, and can also operate safely if a typhoon or storm causes a local blackout by
switching to a free-yaw mode of operation to reduce wind load. Hitachi has supplied
many turbines for wind farms in Japan. In 2018, based on this track record, we
received an order to supply wind turbines for an offshore wind farm in Taiwan.
Going forward, we will strive to meet customer needs by developing total solutions
that use grid interconnection technology to distribute wind power in combination withhigh value-added maintenance services utilizing IoT.

Fukashiba Wind Power
Station in Kashima Port
Hitachi Wind Power Ltd.

Nuclear Power Plants (ABWR*)
The major advantage of nuclear power systems is lower environmental
impact. Compared with fossil fuels, they can generate huge quantities ofpower safely from limited resources with substantially lower emissions ofcarbon dioxide, a significant factor in global warming. Hitachi was the main
contractor in the construction of Chugoku Electric Power’s Shimane Nuclear
Power Station Unit 1, which began operating in 1974. It was the firstcommercial nuclear power system built entirely in Japan. As one of the world’s
Shimane Nuclear Power Station
leading manufacturers of nuclear power equipment, today we are involved in(Unit 3, under construction)
The Chugoku Electric Power Co., Inc.
efforts to restart nuclear power plants in Japan based on new safety standards
and in the reactor decommissioning program in Fukushima Prefecture.
Overseas, we are involved in a project to build a new nuclear power station in the UK. Hitachi aims to make a broad
contribution to realizing a safe and sustainable society through the maintenance and development of nuclear technology.
* ABWR: Advanced Boiling Water Reactor

22Market-related Issues
As we work towards realizing a sustainable society, global
markets for power and energy are undergoing a majortransformation due to the “three Ds” of decarbonization,
decentralization, and digitalization. For widespread
adoption of wind power and other renewables as sourcesof base load power, we not only require systems thatcan cope with harsh natural conditions, but it is alsoessential to develop resilient power transmission anddistribution infrastructure so that power generated fromrenewable sources can be delivered efficiently andreliably to residential and corporate users. Nuclear energy
can generate large quantities of power with minimal
environmental impact, irrespective of the weather.
Provided we pay more attention to the safety aspects,
we believe it has the potential to be a major futuresource of base load power in many parts of the world.
Recently, we have also seen moves to apply
cutting-edge digital technology to facilitate moreadvanced maintenance and management of power
generation systems. Decentralization is an important
emerging trend, with regions taking advantage of local
characteristics to develop distributed energy resourcesthat generate power efficiently for local consumption aspart of creating a recycling-based sustainable society.
Where Hitachi Is Focusing
With over a century of experience in delivering
world-class products, services, and solutions, Hitachi
is contributing to industrial development and therealization of a sustainable society through the supplyof low-emission and zero-emission power generation
systems. To this end, we are looking to generatehigh returns as market leader by investing aggressively
in growth sectors such as the non-carbon energy
solutions business.
In the renewable energy sector, we aim to expand
our wind turbines business globally, while also developing
total solutions to deliver reliable power from the bulk
power network to residential and other users at the edgeof the grid. We are also applying IoT, data analytics, andother digital technology to develop innovative systems,
including virtual power plants* to support state-of-theart power generation as well as more advanced facilities
maintenance systems. Mixed energy distribution solutions that can integrate decentralized power sources
with a large-scale power grid are another major focus
for us.
In the nuclear energy sector, our primary emphasis
is on fulfilling our social responsibility as a manufacturerof nuclear power equipment through our engagement indomestic initiatives. These include efforts to modify
existing nuclear power plants to meet new safety
standards ahead of restarts, and an active role in thedecommissioning of reactors at the Fukushima Daiichi

Feature: Four Focus Business Domains

Executive Vice President’s Message

Toshikazu Nishino
Executive Vice President and Executive Officer

Nuclear Power Station for Tokyo Electric Power
Company Holdings, based on the lessons learned fromthe Great East Japan Earthquake. Overseas, in the UK,
we are assessing the economic rationality as a privatecompany for a project that involves the construction ofa new nuclear power station, amid ongoing discussions
with the British government.

Our Future Mission and Role
A reliable supply of uninterrupted power is essential to
the lifestyles and safety of consumers living in our
modern, highly urbanized society. At Hitachi, we arecommitted to promoting collaborative creation with arange of customers across the energy value chain thatcan support reliable supplies of eco-friendly energy forthe safety and peace of mind of users. We are also
striving to provide new value through the utilization ofdigital technology.
The Creation of Social Value
Finding ways to ensure the reliable and efficient supply ofthe energy essential to modern society while minimizing
environmental impact is vital to an affluent andsustainable future. We aim to contribute to industrial
development and the realization of a sustainable society
by developing power generation systems to exploit
renewables and other zero-emission energy sources,
along with innovative solutions to support efficient
on-demand supplies of energy.
* A virtual power plant (VPP) is a technical solution for balancing power supply
and demand. It uses energy management technology utilizing IoT to aggregate
distributed energy resources such as storage batteries or power generation
systems operated by households or factories, controlling the energy generated
from these sources remotely to integrate them in a way that functionallyemulates a power plant.

SDG Focus

23Industry/Distribution/Water
In this domain covering the Social Infrastructure & Industrial Systems segment, Hitachi develops products
and services such as industry/distribution solutions, water solutions, and industrial equipment. With a 108-year
manufacturing history since Hitachi was founded in 1910, we can supply everything from products for the
manufacturing workplace to control systems for facilities and business support IT systems. Our goal is to be
the best solution partner for customers throughout industries worldwide.

Future Growth Drivers of the Business
Smart Manufacturing Solutions
Utilizing Lumada, our smart manufacturing solutions help customers invarious manufacturing industries to increase production efficiency, automate
production, develop more reliable quality, transfer skills, or address otherproduction-related issues. Solution development often utilizes the high-efficiency
production model established at the Omika Works, or systems are developed in collaborative creation with customers. We offer a wide range ofsolutions, from manufacturing site visualization and predictive equipment
failure detection systems to debottlenecking support and production planning optimization. Reforming the manufacturing workplace using digitaltechnology helps our customers become more competitive.

Generating Post-acquisition Synergies with Sullair
In 2017, Hitachi acquired Sullair, a manufacturer of air compressors with
operations in North America, China, and other countries. This movestrengthened Hitachi’s global air compressor business. Air compressors are
an important source of power for various types of equipment used in factories,
and this market is expected to grow in the future. The combination of the
Sullair sales network with a range of products that incorporate Hitachi’s
high-level technical expertise in this field promises to help us expand thisbusiness globally. The acquisition will also support global expansion of
Hitachi’s overall business in the Industry/Distribution/Water domain byaffording opportunities to supply Sullair customers with marking systems andother industrial equipment, as well as air compressors and digital solutions.
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Monitoring System for the Progress andOperational Status developed in collaborative
creation with Okuma Corporation

Town hall meeting at US factory of Sullair

Market-related Issues
In the Industry/Distribution/Water domain, we supply
products, systems, and services to a wide range ofcustomers, mostly manufacturers but also firms in theretail and transport sectors.
Today, to tackle challenges such as declining
working-age populations, increased workforce diversity,and supply chain globalization, manufacturers in Japanand other countries are looking to address urgent issues
such as making operations more efficient or labor-saving,or ensuring the transfer of technical know-how. Facedwith climate change, water shortages and other issues,
reducing the environmental impact of operations is alsoof increasing concern. These structural shifts within
industry and social issues are leading customers tofocus not only on our tangible products, but also on
intangible aspects such as the value that Hitachi can
add to their business.
Where Hitachi Is Focusing
In this domain, Hitachi can supply everything fromindustrial equipment for the manufacturing workplace(Products) to facility control systems (Operational
Technology, OT) and IT systems to manage operations.
Our aim is to be the best solution partner for customers
based on our ability to supply the total package of
products, OT, and IT.
We have begun offering smart manufacturingsolutions that use Lumada, based on systems we havedeveloped in collaborative creation with Daicel
Corporation, Okuma Corporation, Daikin Industries andother customers for tackling manufacturing challenges
such as increasing production efficiency or transferring
technical know-how. We are reinforcing our lineup by
developing unique products that incorporate amorphous
motors with world-class efficiency. Our vision is to offer
the best solutions to customers by understanding
their issues based on Hitachi’s more than a century of
manufacturing heritage, and by developing value-added
combinations of products, OT, and IT.
Our Future Mission and Role
My objective is to scale up the business significantly
through closer links between the various divisions that I
lead. Including Group companies, the Industry/Distribution/
Water domain spans different industrial sectors andcustomer bases of differing size. Starting from thesystems and products offered by each of thesecompanies, we are expanding the business by providing

Feature: Four Focus Business Domains

Executive Vice President’s Message

Masakazu Aoki
Executive Vice President and Executive Officer

fully integrated Hitachi total solutions and services
aimed at raising production efficiency or developing
more sophisticated operations. Hitachi’s acquisition in2017 of the Sullair-branded air compressor businesshas also secured us new customer channels in North
America and China. Our customers in the industry
domain face the same issues worldwide. Leveraging
our experience in Japan and Hitachi’s strengths inproducts (manufacturing and production technology),
OT (control/operational technology), and IT (technologies
for data analysis and processing), we will develop theSocial Innovation Business using our digital technology
through approaches to a broad range of customers
around the world.

The Creation of Social Value
Solving issues for customers also helps to achieve
the SDGs. We will contribute to realizing a sustainable
society in which people can enjoy dynamic andcomfortable lives worldwide through the supply
of systems with low environmental impact andenergy-saving products.

SDG Focus

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UrbanThe Urban domain is composed of the four businesses of: Building systems (elevators and escalators) and
Railway systems from the Social Infrastructure & Industrial Systems segment, Automotive systems(automotive products and car information systems), and Smart Life & Ecofriendly systems (home applianceand air-conditioning equipment). In this domain, our aim is to improve the Quality of Life for people worldwide by providing products and services that are essential for daily living.

Future Growth Drivers of the Business
Building Services for Advanced Lifestyle Support
Hitachi provides building services including round-the-clock remote monitoring of elevators and other equipment. We
offer advanced IoT-based services that use collected operational data to formulate plans for parts replacement andother maintenance, and to predict when a breakdown might occur without
needing an inspection by a service engineer. Going forward, in addition toaccelerating the global development of the high-quality maintenance services
that we have developed over many years, we plan to fine-tune building
services by utilizing Lumada to collect and analyze a range of data, including
operational data from building equipment and data on the flow of people
inside buildings. These services include providing buildings guidance support
using service robots, and enhancing the value of building facilities based on
Building equipment is monitored remotely from acall center
the analysis of those entering the building.

Railway Systems/Solutions for High Quality and Reliability
Hitachi is developing systems and solutions globally to support rail services of high quality and reliability as a providerof rolling stock and traffic management systems, along with fully integrated solutions that include project management.
In the UK, we are applying advanced IoT-based maintenance services for the rolling stock of the Intercity Express
Programme. With the Copenhagen Metro, we are testing a Dynamic Headway solution to adjust the frequency of train
services automatically to the degree of crowding inside stations. Going forward, we will leverage Lumada technology
to develop railway systems/solutions that deliver added value to our customers in innovative ways.

Executive Vice President’s Message
Market-related Issues
In the Urban domain over which I preside, Hitachi isdeveloping global businesses based on products thatare highly familiar in daily life, including elevators, railways,
automobiles, and home appliances. For consumers,
these businesses form the public face of Hitachi.
Given the continued advance of urbanization
around the world today, notably in Asia, we expect
markets to continue expanding within the Urban domain.
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Greater urbanization also brings with it a set of emerging
issues that we will need to address proactively, including
the demographic aging, energy supplies, and ensuring
the safety and security of people in the face of growing
threats from disasters and crime.
The common trends affecting the four major
businesses within the Urban domain of elevators andescalators, railway systems, automotive products, andhome appliances are captured in the acronym CASE*.

Feature: Four Focus Business Domains

First, we are seeing a significant move away fromproduct ownership to usage models based on sharing.
Second, there is a shift to autonomous operation—not
only in automobiles, but also in many other products—that also places significant emphasis on the use ofelectronics as manufacturers focus on energy-efficient,
low-carbon products. In addition, these products are
increasingly connected using digital technology, whichis enabling the development of new solutions for solving
customer issues. While engaging with these trends
directly, we are working to address various lifestylerelated issues in collaborative creation with customers.
*CASE: Connected, Autonomous, Shared, Electric

Where Hitachi Is Focusing
It goes without saying that digital technologies such as
AI and IoT will hold the key to our addressing customer
issues through the Social Innovation Business. At thesame time, to expand the business globally in a
cost-competitive way, we will also need to utilize digitaltechnology to improve the efficiency of processes suchas design and maintenance. For these reasons, I think
digital technologies will be the most important growth
driver in the Urban domain. Monitoring whatever istroubling customers in real time and providing appropriate
solutions will require always-on connections to digitaltechnology platforms. By collecting and analyzing thedata from monitoring operations, we can determine
where any problems exist in products and systems, andwork out how to make improvements. For example, we
are undertaking round-the-clock remote monitoring ofelevators and other building equipment to collectoperational data. Analysis of these data not only
facilitates smart maintenance, but also allows us toprovide services to help customers achieve goals suchas optimizing the building power consumption.
Hitachi can also provide one-stop solutions toaddress customer challenges because we not only handle
product design and manufacture as well as systems
operation and control, but also build IT systems. For
example, in the Railway systems business, Hitachi byitself can supply a fully integrated solution, from the
manufacture of rolling stock and building traffic management and signaling systems, to maintenance services
and the construction of ticketing systems. This can offer
customers major advantages in terms of simplicity andefficiency compared with the complicated process ofengaging multiple suppliers to build the system. In thisway, our ability to combine OT (Operational Technology),
IT, and products to connect customers to digital technology means we can create solutions that were neverpossible before. This is the original value Hitachi can

Keiji Kojima
Executive Vice President and Executive Officer

provide as an Innovation Partner for the IoT Era via
collaborative creation with customers.

Our Future Mission and RoleThe Urban domain enables us to evolve into a well-known
global enterprise as a leader in the development of bold
new technologies that are a fine testament to Pioneering
Spirit, one part of the Hitachi Founding Spirit. With ahigh proportion of overseas revenues and an array of
global talent in positions of leadership, ours is the domain
spearheading Hitachi’s globalization. My mission is toutilize Lumada and other digital technologies to radicallyreinforce the competitiveness of our product range,
while also further developing global markets that are
expanding as urbanization progresses. Another criticalpart of my mission is to optimize our investment in the
Urban domain and ensure that we make timely investments to generate synergies at the consolidated level.
The Creation of Social Value
The Corporate Credo of Hitachi since its inception has
been “Contribute to society through the development ofsuperior, original technology and products.” As a company,
we pursue not only financial targets, but also social
contributions. In the Urban domain, based on our vision
for next-generation urbanization, we will leverage digitaltechnology to help achieve the SDG11 goal of sustainable
cities and communities.

SDG Focus

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Finance/Social/Healthcare
In the Finance/Social domain, targeting customers in social infrastructure fields such as finance, electric
power, and transport as well as customers in varied areas including the public sector, we develop andsupply a broad range of IT services from consulting to systems integration, operation, maintenance, andsupport. In the Healthcare domain, there are three core businesses that we are developing by leveraging
Hitachi’s strengths in digital technology: Diagnostics and Clinical (including diagnostic imaging equipment
and particle therapy systems), Testing and Reagents (including analytical systems), and Informatics(based on big data utilization). We are contributing to the growth of medical institutions and related healthprofessionals as well as the realization of healthy, enriched lifestyles for people.
This domain also plays a central role in developing and promoting the use of platforms that provide
across-the-board support to Hitachi’s front operations, in the process driving the growth of the overall Lumada-based
digital solutions business.

Future Growth Drivers of the Business
Solutions Group Utilizing AI, Big Data Analysis and Other Cutting-edge Digital Technologies
By combining the extensive business experience and know-how that Hitachi has acquired to date with cutting-edge
digital technologies such as AI and Big Data analysis, we are offering Lumada-based solutions to customers acrossa variety of fields.
In the Finance domain, we support more advanced and efficient investigative screening of trading in equities byapplying AI to analyze illicit transaction probabilities. Elsewhere, Hitachi analyzed medical big data by leveraging theanalytical know-how we have cultivated in technology for forecasting healthcare expenditures, and we havedeveloped a quantitative model to predict the possibility and length of hospitalization due to lifestyle-related diseases.
This model can assist life insurers in reviewing broadening the scope of their customers who can take out insurance.
In the Social Infrastructure domain, we are supplying solutions to help deliver improved services for passengers
and other end-users. We have been involved in the development of a service that distributes images of visualized
people flows and related crowding phenomena inside stations in a timely manner, with people flow analysis technology
utilizing images from monitoring cameras. We have also helped public transport operators optimize timetables in linewith demand, based on analyzing and visualizing traffic volumes and transportation demand. In other initiatives todevelop and build safe, secure, and comfortable urban
infrastructure, we are supporting the development ofadvanced analytical tools for analyzing and predicting
power demand and pricing trends in electricity retailmarkets with AI.
Going forward, Hitachi aims to engineer further
evolution in the Social Innovation Business by supplying
innovative Lumada-based digital solutions throughcollaborative creation with various stakeholders. In
doing so, we hope to contribute to the realization of asociety in which people around the world can live insafety, security, and comfort.
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Keiichi Shiotsuka
Executive Vice President and Executive Officer

Market-related Issues
In the Finance/Social/Healthcare domain, we aresupplying innovative solutions to address various social
issues, based on maximizing the strengths of Hitachi indigital technology. Examples include digital payments inthe finance field and informatics in healthcare fields.
In this domain, efforts are also directed toward
undertaking the development of IoT platforms, and as adigital-centric business entity, we are playing a central
role in promoting the expansion of Hitachi’s overall
digital solutions operations by encouraging thecross-sectoral utilization of Lumada.
Today, the connection of a wide range of things to
the Internet enables access to knowledge gleaned fromthe analysis of vast quantities of data. This is causing awave of digitalization to generate new value for society
and businesses. Hitachi is required to create new
business models and service models, and support
dramatic improvements in productivity by leveraging ourstrengths in digital technology.
Where Hitachi Is Focusing
Beyond the domains of Finance and Social Infrastructure,in both of which Hitachi has been supplying IT services
for many years, we are also expanding our digitaltechnology-based operations into the Healthcare
domain. In these areas, working beyond Business Unit
structures, we are helping a variety of customers toundertake digital transformations.
As well as developing new finance and insurance
products based on the utilization of AI and big data, weare also assisting customers with solutions to help easecongestion or improve the efficiency of logistics operations,and developing services aimed at improving the qualityof healthcare or its operational efficiency. We also aim tocreate new value across industrial sectors by using
digital technologies. For example, we facilitate smarter
contracts or transactions via linkage of settlement
systems with various commercial and logistical flows
using blockchain technology.
Today’s rapid pace of technological innovation means
it is essential for us to hone solutions in partnership withcustomers based on identifying issues, formulating
hypotheses, and testing solutions in a continuous,fast-paced cycle. We aim to help customers reinforce
competitiveness and realize an affluent society, we
generalize the Lumada customer case in various fields
and utilize it throughout the whole of Hitachi for rapid
development and supply of solutions.

Our Future Mission and RoleMy role is to take the lead in driving the growth of theSocial Innovation Business and to generate growth inglobal markets by developing a mechanism for applying
state-of-the-art digital technology across the entire
Hitachi Group. I view our mission as the creation andtimely market introduction of high value-added digitalsolutions using Hitachi’s operational technology (OT), IT,
and products. To this end, we recognize the importanceof dynamically optimized HR assignments for our digitalspecialists so that we can strengthen the global deliveryof these solutions.
The Creation of Social Value
Even as digital technology has evolved these days, it ispeople who are originating ideas and creating value.
Technology is merely a tool, and the aim of Hitachi’s
Social Innovation Business is to pursue improvementsin the quality of life for people, focusing on people wholive there. We hope to contribute not only to the growthof advanced countries, but also to the development of
nations and regions where residents find it hard toaccess safe drinking water, food, or healthcare. And wecreate solutions that use digital technology to make theworld a better place.
SDG Focus

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Feature: Four Focus Business Domains

Executive Vice President’s Message