Microsoft and Hitachi form multibillion-dollar AI deal

Microsoft has announced a multi-billion dollar AI-focused partnership with Japan’s Hitachi.

The collaboration is designed to use generative artificial intelligence (AI) to drive growth in Hitachi’s software and business services business, Lumada, particularly in areas of “social infrastructure” such as energy and mobility, according to a news release on Monday (3 June).

“We’re entering a new era of AI with the promise of delivering transformative business results in every role and industry,” Microsoft CEO Satya Nadella said in the announcement.

“Our expanded partnership with Hitachi will combine the power of Microsoft Cloud with Hitachi’s industry expertise to improve the productivity of Hitachi’s 270,000 employees and help address customers’ biggest challenges, including sustainability.”

The three-year partnership will see Hitachi incorporate Microsoft products such as Microsoft Cloud and GitHub Copilot into Lumada. Hitachi aims to achieve $18.9 billion in revenue from Lumada this fiscal year.

Hitachi CEO Keiji Kojima said his company has already worked with Microsoft on digital solutions for manufacturing and logistics.

“Under this new agreement, we are excited to further accelerate social innovation by expanding our efforts in social infrastructure areas such as energy and mobility, and applying generative AI, to improve the productivity of frontline workers, which will become even more important in the future”, he said. “By combining our skills, we can help solve issues facing our customers and society and contribute to a more sustainable future.”

The partnership comes as Microsoft continues to invest heavily in AI, both through efforts like its recently announced infrastructure project in Sweden and its plans for the personal computer.

As PYMNTS wrote last month, Microsoft’s new “Copilot PCs”—a new version of Windows machines designed to handle generative AI processes locally—demonstrate that the company is “betting that the future of computing will powered by AI — and that users will want that intelligence at their fingertips, not in the cloud.”

As covered here, the move to local AI processing on PCs is a key shift in the industry, as the need to address issues like data privacy and performance bottlenecks associated with cloud-based processing grows as AI becomes more usual.

By providing personal computers with hardware dedicated to AI tasks, Microsoft hopes to provide users with a more secure and efficient computing experience.

“However, it remains to be seen how well these machines will perform in real-world scenarios and whether they will justify the potentially higher costs associated with advanced hardware,” PYMNTS wrote.