R&D strrategy

gy
- Strategies to acce
elerate new growth -

12th April 2010

2

Shigeru AZ ZUHATA, D.Eng.

Vice Presiddent and Executive Officer,
General Manager,
M Research & Development Group,
Hitachi, Lttd.

© 2010 Hitachi, Ltd. All rights reserved.

Contents
1. Corporate R&D orrganization
2. R&D to pioneer fu usion & environment
business
3. Positioning for the
e future
4. IP strategy
5. Summary

© 2010 Hitachi, Ltd. All rights reserved.

Contents
1. Corporate R&D orrganization
2. R&D to pioneer fu usion & environment
business
3. Positioning for the
e future
4. IP strategy
5. Summary

© 2010 Hitachi, Ltd. All rights reserved.

1-1. R&D organization
President
Hitachi Gr. CTO
CTO: Chief Technology Officer
Central Research Laboratory
Research & Development Gr.
Advanced Research Laboratory
I t ll t l P
Intellectual Property
t GGr.
Hitachi Research Laboratory
Company CTO
acrross the Hiitachi Grou
Te
Power Systems Company Systems Development Laboratory
echnology Platformss
Industrial & Social Infrastructu
ure
Systems Co.
Urban Planning & Devt. System ms Co. Mechanical Eng. Research Lab.
Information Control Systems Company
C
Info & Telecommunication Sysstems Co
Info. Co.
Defense Systems Company
P d ti Eng.
Production E Research
R h Lab.
L b
Battery Systems Company (2010/4 - )
Design Division (integrated 2010/4 -)
Development lab/division
up
Energy & Environmental Syystems Lab Overseas R&D facilities
(Power Systemss Company)
Development Center
Business Division
Devt. & Deesign Section
Group company CTO
© 2010 Hitachi, Ltd. All rights reserved. 3
1-2. R&D scheme

Business target ２０１０ ２０１５ ２０２５

Management Focus on social in

nnovation business
strategy E
Environmental Vision 2025

Company Business strategy roadmap

Long-tterm technology devt. plan

Research Sponsored
p research Frontier
o te
& Adv. sponsored re
esearch & Platform research
(Company funds) (Corporate HQ funds)
Development
Current busine
ess / Generate innovative
next generation business expansion
next-generation & disruptive technologies
<Generate No. 1 business> <Shifts in paradigm>

© 2010 Hitachi, Ltd. All rights reserved. 4

1-3. R&D investment
■ R&D expenditure
10% R&D expenditure
8% as % of Revenue
6%
5 2% 5
5.2% 5.2%
2% 4.6% 4.3% 4.3% 4.3% 4% Corporate labs
4.0% 3.8% 4.2% 2%
15％
enditure (billlion JPY)

0%
450
400
In-house
350 Hitachi Gr.
Gr
company 20％
％
300 company
250 Hitachi Group
p 65％
200
R&D expe

150
100 Breakdown of expenditure
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 Fiscal Year

■ R&D personnel FY2008 FY2009 FY2010

Corporate labs + Devt.
Devt labs Hitachi,, Ltd.
Hitachi Ltd 3 700
3,700 3 600
3,600 3 500
3,500
Hitachi Gr. co. 2,200 2,200 2,200
Tota
al 5,900 5,800 5,700

© 2010 Hitachi, Ltd. All rights reserved. 5

1-4. Improving return on in
nvestment
■ R&D efficiency based on Hitachi Gr. co
onsolidated financial data

6 p
R&D expenditu /
ure/Revenue ((%)) 1.00 
Operating income/Revenue (%)
5 ROI 0.80 
4 Operating
（

i
income
％）

0.60 
3 R&D
expenditure
0.40 
2

1 0.20 

0 0 00
0.00 
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fiscal year

Focus on social inn

novation business
© 2010 Hitachi, Ltd. All rights reserved. 6
1-5. Focusing on social inno
ovation
S
Social
i l inno
i ovation
ti business
b i
Social
Social・
・Industrial
Industrial・
・Urban
n development systems
Urban systems Transport
T systems

Cloud Smart
grid Green mobility
Eco-friendly
Software data centers Fussion Nuclear power
generation
Network
busiiness Renewable energy
Thermal power generation
Info. & Telecom. systems Storage Power systems

Keyy de
evices

© 2010 Hitachi, Ltd. All rights reserved. 7

1-6. cPrioritizing R&D inve
estment

1 Increased appropriation of corporate

e funding to social innovation areas
Corporate funds Corporate funding portfolio

30% 40% 4
40% 25%
55%
70% 20% 20%
■Social innovation
FY200
09 ■Platform
Company funds ■Other FY2010

2 Priority investment in social innovatiion research

Accelerate key projects: approx. 20 Accelerate business・commercialization

① Special
S i l research
h project
j t (Tokken)
(T kk ) ② Strategic
St t i b business
i project
j t (S
(S-PJ)
PJ)

„ Coverage: Backbone technology „ Coverage: Important businesses to

for future business & be set-up in minimum time
products
„ Term: 1-2 years „ Leader: Business division.
„ Leader: Research Dept. Mngr.
© 2010 Hitachi, Ltd. All rights reserved. 8
1-7. dConvergence of IT research facilities
■ C
Consolidate
lid t IT research
h facilities
f iliti into
i t the
t Yokohama
th Y k h area tto iincrease
development efficiency
Central Research IT business divisions
Laboratory Net o k /Software
Network /Soft a e
Yokohama a area
(660 researrchers) Server
Centra
al Research
Financial
Kokubunji Labora
atory Industrial
160 of 940 researchers 160 pe
eople Public
Systems Development System
m Development
Laboratory Labora
atory
500 pe
eople
Storage
IT R&D hub

Yokohama Laboratory
200 researchers <Assignment> >
„ Build-up
p IT p
platform for social infrastructure
„ Contribute to
t cloud computing business
Kawasaki Laboratory
300 researchers
© 2010 Hitachi, Ltd. All rights reserved. 9
 Fusion business
1-8. eStrengthen global R&
&D
■ Regional R&D synchronized with expan nsion of social innovation business overseas
North z Strengthen green mobility research
America z Promotion of smart grid research (NEDO pilot project in NM, U.S.A.)
Participation in NEDO pilot project in New
w Mexico, USA Hitachi America, Ltd.

arch hub
• PCS
• Storage batteries PC
CS for
• Amorphous transformers meega solar

Resea
Power Systems Company, po
ower systems <40 employees>
Info. Control Systems Company, Green mobility,
Hitachi Research Laboratory Storage systems
PCS: Power Conditiioning System
z Participate in the Chinese Nationa
al Development and Reform Commission project
China z Lead info. & telecommunicationss and software business development in China
Agreement with the Chinese National Developme ent and Reform Hitachi China
Commission (NDRC) to collaborate in the “Low
Low caarbon society R&D Corporation

esearch hub
b
construction and Resource recycling” project (200
09/11/8)
nge (2010/3/19)
NDRC-Hitachi Green Economy Technology Exchan
3/19 Sub-com mmittee theme
NDRC Tech exchange
Tech. [Hi hl ffi ientt electricity
[Highly-efficie l t i it <80 employees>
l

Re
Model projects generation & smart grid]
Joint research Smart grid, Offshore
[Water treatmment]
Hitachi Personnel [Home applia ance recycling]
devt., Adv. software
management [Urban transp port (subway)] © 2010 Hitachi, Ltd. All rights reserved. 10
1-9. Integration of the Dessign Division
■ Contribute to business innovation “Visualization” of social
1. “Visualization” of social innovation businesss through innovation business
innovative technology and market (people//lifestyle) focus
2. Introduction of human-centric design g to Inffo. & Telecomm.
and Power & Industrial systems fusion area as

Hu uman
・ Active introduction of
Innovative
Life
festyle human--centric design
human
technology
foccused
deesign

Business · R&D Experien

nce Design

① ② ③

Preparing requirement
d fi iti d
definition documentt
UK IEP (Intercity Express Ultrasound sca
anner Application of Experience Design
Programme) high-speed trains HI VISION Prreirus in information business (financial/public):
[2009 Good Design Gold
G Award] Visualization of customer requirements
© 2010 Hitachi, Ltd. All rights reserved. 11
Contents
1. Corporate R&D orrganization
2. R&D to pioneer fu usion & environment
business
3. Positioning for the
e future
4. IP strategy
5. Summary

© 2010 Hitachi, Ltd. All rights reserved.

2-1. Hitachi Group growth strategy

Focus on social innovation business

1. Expansion
p of global
g bu
usiness

2 Fusion
2. F i off iinformation
f ti & telecommunication
t l i ti (IT)
systems and power & industrial (PIS) systems

3. Expansion of environm
mental business

© 2010 Hitachi, Ltd. All rights reserved. 13

2-2. FY2010 R&D initiativess

To generate globally competitive

c business
Build up information platform
Build-up ms for social infrastructure
１ Facilitate business cooperation and coontribution to fusion business by
１.
consolidate IT research facilities in the Yokohama area

D
Develop
l platform
l tf ttechnologi
h l ies
i to
t supportt IT-PIS
IT PIS ffusion
i
２. /environmental business
Eco-friendly data centers, Railway Sysstems, Inverter, Li-ion batteries

３. New directions in electronics

s research
forr social innovation business

４. Strengthening Green Mobilitty R&D for environmental

business expansion

© 2010 Hitachi, Ltd. All rights reserved. 14

 Information platforms
2-3. Social infrastructure in
nfo. platforms
■ Collect massive volume of data from social infrastructure, transform into
value-added information and control
Social infrrastructure
Manufacturing Smart Smart
cities grid Green
Urban planning Mobility

Power infrastructure
Data volume

Plant
Transport Rail infrastructure
ollect

ntrol
2006 2025

Con
Co

Next-generattion network
① Social infrastructure network layer Collect・Control
KaaS (Knowledge as a servicce) Massive data management
Cloud ② Knowledge creation · syystem coordinated platform Add value
computing
Server Middleware Encryption
Storage
(virtualiization)
Eco-friendly
co e d y Highly reliable
data center f
③ Information pro f
ocessing platform information processing
Social infrastructure information
i platform
© 2010 Hitachi, Ltd. All rights reserved. 15
 Information platforms
2-4. Network transport equipment
■ Highly reliable high quality next-genera
ation transport equipment integrating
various services in one infrastructure
• World’s first operational service via delivery to
t a domestic carrier (2009/8)
Awarded 52 (FY2009) Best Ten New Produ
nd ucts Prize
Features (Nikkan Kogyo Shimbun,
S Ltd.; 2010/1)
1. Able to accommodate various services regarrdless of whether it is
packet communication or legacy transmissio on Packet transport
2. Providing high quality & high reliability: 99.9
999% availability MPLS-TP equip.

Network
4. Central control of network management 3. Constant monitoring of
•Quality assurance system transmission quality
Id tifi ti off failure
•Identification f il llocation,
ti restorati
t tion
NGN/
Packet

Broadband Router
Wide-area
ethernet Switch
Packet
transport P
Packet transport path
Mobile Packet Mobile
phone Adaptor transport
acy

Landline
Lega

Dedicated Adaptor 2. Instant path switching upon failure Optical transmission

line networks
1. Accommodating Central Research Laboratory
multiple services © 2010 Hitachi, Ltd. All rights reserved. 16
 Information platforms
2.5 Virtualization technology supporting info
ormation processing platforms
e Highly
g y reliable information processing
p g platforms
p

Storage capacity virtualization Server virtualization

Providing users with virtual storage capacity Multiple business processes achieved on
greater than actual capacity
g p y one server
• 51st (FY2008) Best
• Worldwide No. 1 share Ten New Products
in enterprise storage Prize (Nikkan Kogyo
capacity Shimbun; Jan. 2009)
• 13 year
ea sales record
eco d of • FY2009
2009 Kanto local
l l
No. 1 domestic share for Enterprise storage commendation for
storage USP V invention: Invention Blade server
encouragement prize Blade Symphony BS2000
Integrated
Task A Task B Task C management of number of
Storage administrator Physical server 2 administrators,
virtual storage
⇒number of Physical server 1 cost reduction
Virtual storage equipment administrators,
Virtual capacity LPAR#1 LPAR#2 LPAR#3
USP V 800TB cost reduction
Total actual capacity
p y Task A Task B Task C
350TB
OS OS OS
150TB
In a system which
manages several
Virtualization mechanism
servers, the tasks
from low load
Free capacity Memory servers are
collected on one
100TB 80TB
20TB allocation for each
Older Near line
task⇒ increased CPU CPU CPU CPU physical server
Hitachi model (low cost) Other vendor
capacity
Provide a larger virtual capacity than actual total capacity Use one physical server as if 2 or more theoretical servers exist
Central Research Laboratory & Syystems Development Laboratory © 2010 Hitachi, Ltd. All rights reserved. 17
 Fusion business
2-6. Eco-friendly data cente
ers
■ Verification tests conducted on prototype
e IT/Air conditioning Facilities collaborative
control system
Prototype configuration IT power control operation status

IT-Facilities collaborative control Power control server

Optimized Optimized Job monitor ON/OFF control
IT workload air--conditioning
air
consolidation control

Operation | Power
Idle
server
Operation
p OFF
Control status data Server
ON

ＩＴ equipment
q p Air--conditioner,
Air
Air-conditioning power savings
etc
etc. J b1 2 3
Job

Outdoor air-
air-cooling Workload consolidation trial system
ON/OFF control synchronized with operation
Central Research Laboratory
Verified 20-50%
% power savings Mechanical Engineering Research Laboratory
Systems Development Laboratory
© 2010 Hitachi, Ltd. All rights reserved. 18
 Green mobility
2-7. Global rail services
■ 2009/12/13 UK high speed express (Cllass 395) commences operation
(St. Pancras Station
n, London) Features
London

Existing line
1. Designed to conform to
European carriage
New express line
regulations
2. Aluminum carriage: “A-train”
Ashford

St it off D
Strait Dover
Awarded Prime Minister
Minister’ss Prize in
the 39th Japan Industrial
Channel Tunnel Rail Link Class 395 in op peration
(Carriage designed by Design Divn.) Technology Awards (2010/4/7)

Core technology supporting global rail systems

Analysis-led design Supercomputer MONOZUKURI Inverter & Battery UK IEP
simulation technology technology (Intercity Express Programme)
2009/2 Appointed preferred
Friction stir welding bidder status

Light-weight, compact & low

noise inverter
Collision absorption block
Hitachi Research
す れ違う
Hitachi Research Labo
oratory
◊ Planned delivery:
２つの車両

Laboratory
b
max. 1,400 cars
Mechanical
車両やトンネル壁
の圧力変動を評価 ◊ Planned delivery:
Engineering
Research Laboratory Li-ion battery system 2013-2018
Two trains passing in a tunnel © 2010 Hitachi, Ltd. All rights reserved. 19
 Green mobility
2-8. Fortifying inverter R&D
D
■R&D formation to expand business in hiighly efficient,
efficient compact & low cost inverters
Power device & modules
Inverter research organization
(2010/4) Inverter circuits & control
Hitachi Research Laboratory Approx. 120 people Inverter design platforms
Central Research Laboratory
Production Engineering Research Laboratory
Mechanical Engineering Research Laboratory

Main applications 30% decrease in power

4 conversion loss (2009/4)
Hitachi 4.5mm Pro
ototype Si chip
Rail cars

(3kV/10)
3 SiC diode
di d
esistance (kV))

4.5mm

2
SiiC diode Si-IGBT
UPS*
*
Pressure re

GaaN diode
d. equip.

1 Prototype module 3kV/400A

Ind

0
0 40 80 1
120 160
Current capacity （A）
*Uninterruptible power source © 2010 Hitachi, Ltd. All rights reserved. 20
 Green Mobility
2-9. Li-ion batteries
■ Strengthen R&D to expand business in n high output,
output high quality & safety Li-
ion batteries for motor vehicles and ind
dustrial applications
Hitachi Research Laboratory Approx. 70
7 people
(
(Adv. Batteryy Research Center,, estab. 2009/4)
/ ) Batteryy Systems
y Company
p y
Mechanical Engineering Research Laborato
ory (est. 2010/4)
Production Engineering Research Laborato
ory
2x battery capacity
HEV/Trains PHEV/EV V/
5 Construction e
equip. Product
4th Gen.
[2013～ planned] Development
4
Announced 2009/5/19
wer densityy (kW/kg)
ous force

3 2x battery life
3rd Gen.
[2010] For PHEV [2013～planned]
2
= IInstantaneo

2nd Gen. Announced 2

2010/1/12
[2005] 107mm

1 UPS/Powe
er storage
NiMH
Pb Industrial use
e [Announced 2010/4/5]
Pow

0 ←46mm→
0 50 100 150 200 250
Energy density (Wh/kg) = Sustainability
PHEV: Plug-in Hybrid Vehicle EV: Electric Vehicle HEV: Hybrid Electric Vehicle UPS: Uninterruptible Power System © 2010 Hitachi, Ltd. All rights reserved. 21
Contents
1. Corporate R&D organization
2. R&D to pioneer fusion & environment
bus ess
business
3. Positioning for the future
4 IP strategy
4.
5. Summary

© 2010 Hitachi, Ltd. All rights reserved.

 3-1. Challenging R&D frrontiers
1910 1950 198
80 2000 2010～

Independent technology devt. Co-generation Global/Open innovation

Electric locomotive E i
Environment
t/E
Energy
ED 15 (1924) MOS transistor
Shinkan
nsen traffic Innovative materials for
manageement systemPattern batteries
5HP motor (1972)
First product with
domestic tech. Next Generation BWR
Electron
microscope New Power Device
(1942) The Chugoku
Electric Power Co., Inc. IT
Finger vein
Shimane nuclear General purpose
p authentication New ICT
power plant (1974)
compute
er equipment (2000)
Electron beam Next Generation
holography Photonic Connection
Verification of the A-B Effect
(1986)
Innovative Technology
Proton beaam for Database
therapy facility Perpendicular Basic
MD Anderson cancer
c center magnetic
Treatment starrted on (2002)
recording HDD Robotics
(2000)
Single cell analysis
Brain Machine Interface

© 2010 Hitachi, Ltd. All rights reserved. 23

3-2. Global / open innovvation
■ Promotion of world
world-leading
leading advanced re
esearch to pioneer next
next-generation
generation industry
through concentration of knowledge witthin Japan and overseas
Advanced storage device Analytical technology for semiconductor
• Hitachi Cambridge Laboratory,
Laboratory ARL,
ARL CRL characteristics (2008/2～)
• Univ. of Nottingham, Univ. of Cambridge • IBM Watson Laboratory
• Paris South Univ., Charles Univ. in Prague • SUNY Albany Nanotech Complex
• Hitachi High-Technologies Corporation
• Central Research Laboratory
Spintronics
(2009: Nature Physics)

Encryption
US NIST international Cryptographic Tsukuba Robo
ot special zone Semiconductor
Hash Algorithm Competition (2012) （2010/4 ）
（2010/4～） i
inspection
i
• Katholieke Universiteit Leuven equipment
• University of
o Tsukuba (CD-SEM)
• System Development Laboratory
• Mechanical Engineering
Research Laaboratory Autonomous robot
(Public space experiment)

Atomic level resolution holography electrron Green nano-electronics device

microscopy (FIRST program 2010/4～) Tsukuba Innovation Arena (2010/4～)
• RIKEN • Advanced Research Labora atoy • AIST • Central Research Laboratory
• MEXT • Central Research Laboratorry • METI • Hitachi Research Laboratoryy
Electron • JST
microscope
Power device
AIST: National Institute of Advanced Industrial Science and Technology METI: Ministry of Economy, Trade and Industry
M
MEXT: Ministry of Education, Culture, Sports, Science and Technology J
JST: Japan Science and Technology Agency © 2010 Hitachi, Ltd. All rights reserved. 24
Contents
1. Corporate R&D organization
2. R&D to pioneer fusion & environment
bus ess
business
3. Positioning for the future
4 IP strategy
4.
5. Summary

© 2010 Hitachi, Ltd. All rights reserved.

 IP stra
ategy
-No. 1 IP strength in sociial innovation business –
Strengthening oversea as patent applications
(esp in Asian devveloping nations)
(esp.

© 2010 Hitachi, Ltd. All rights reserved.

4-1. Globalization of IP activity (1)
■ Strengthen overseas patent app
plications
• Total no. of patent applications: Overseas > Domestic
• Shift focus from US to developing naations in Asia
• Potential PCT patent applications forr potential markets

Domestic: 53% Overseas: 47% Domestic: 50%

50%< Overseas: >50%
50%

Europe & US (22%) Europe & USA (20% <)

Developing nations
Japan (53%) (12%) Japan (50%<)

PCT route (30%<)

PCT route (13%) (Mainly in developing
nations)

FY2009 results FY2010 target

・ Anti-counterfeit measures: Reinforce local staff (numbers & education)

※ PCT (Patent Cooperation Treaty ): WIPO international treaty covvering international patent applications © 2010 Hitachi, Ltd. All rights reserved. 27
4-2. Globalization of IP activity (2)
■ Strengthening portfolio in developing nations of Asia
Patent applications in China (5 year total)
Heavy Information &
elect ical
electrical Telecommunications

Hitachi Gr. Co. Ａ Co. B Co. C Co. D Hitachi Gr. Co. E Co. F Co. G Co. H

Patent applications in South-East Asia (5

5 year total)
Heavy Information &
electrical Telecommunications

Co. A Hitachi Gr. Co. C Co. B Co. D Co. E Hitachi Gr. Co. H Co. F Co. G

※Hitachi survey based on Shareresarch、PATOLIS、IFIPAT/Questel‐‐orbit、Pat-List/CN © 2010 Hitachi, Ltd. All rights reserved. 28
4-3. Current state of patent acquisition (1)
■ Example areas of IP activity focus for social innovation business
Company FY 2010 FS/PPM theme
Environmental/highly
E i t l/hi hl efficient
ffi i t th
thermall
Power Systems Company p
power generation; Nuclear power
g
generation; Power device (SiC)
Industrial & Social Infrastructure G
Global rail
Systems Company
Information Control Systems S
Smart grid
Company
Urban Planning & Development
E
Elevator
Systems Company
Information & Eco friendly data centers
E
Eco-friendly
Telecommunication Systems N
Next generation networks (NGN)
Company C
Cloud computing

B tt
Battery S
Systems
t C
Company L
Li-ion b
batteries

FS: Flagship PPM: Patent portfolio mana

agement
© 2010 Hitachi, Ltd. All rights reserved. 29
4-4. Current state of patent acquisition (2)
■ Environment-related technologyy patent portfolio ons
or major natio
nts in 2009 fo

Highly functional
materials
Information &
Telecommunications
blicized paten

Power & industrial

No. of pub

Hitachi Co. A Co. C Co. B Co. G

Co. D Co. F Co. E
Group

1) Total of patents publicized patents for Jpan, USA, EU (EPC), and China
2) Hitachi survey based on Shareresarch、PATOLIS、IFIPAT/Questel‐orbit、Pat-List/CN
© 2010 Hitachi, Ltd. All rights reserved. 30
4-5. IP activity targets

■ Differentiation
Diff ti ti & prevention
ti , contribute
t ib t tto orders
d

■ Secure degree of freedom for

f business (cross licensing)

■ Income from patent fees

© 2010 Hitachi, Ltd. All rights reserved. 31

Contents
1. Corporate R&D organization
2. R&D to pioneer fusion & environment
bus ess
business
3. Positioning for the future
4 IP strategy
4.
5. Summary

© 2010 Hitachi, Ltd. All rights reserved.

Summary

■ New corporate R&D structu

ure
• Shift the R&D portfolio towa
ards social innovation business
• Consolidation of IT research
h facilities & integration of the
Design Division
■ Research strategy
• Reinforce development of original technology to pioneer
IT PIS ffusion
IT-PIS i b business
i
• Innovative technology to exxpand environmental business
& reinforce
e o ce de development
e op e t o
of key
ey co
components
po e ts

■ IP strategy
• Reinfo
Reinforce
ce o
overseas
e seas (esp
(esp. in developing
de eloping nations in Asia)
patent applications
© 2010 Hitachi, Ltd. All rights reserved. 33
© 2010 Hitachi, Ltd. All rights reserved.