Hitachi Ltd and partner General Electric may struggle to hit a long-term orders target for nuclear power plants due to signs of waning demand in the United States, the president of Hitachi said.
Hiroaki Nakanishi also told Reuters in an interview that Hitachi was in talks with Taiwan's Hon Hai Precision Industry Co about a tie-up in small liquid-crystal display panels, confirming media reports of talks earlier this week.
Hitachi and GE joined forces in 2007 and set up joint ventures in Japan and the United States, with the aim of tapping growing demand for nuclear power. Hitachi owns 80 percent of the Japan venture while GE has a 60 percent stake in the U.S. firm.
The partners have set a target of securing orders for at least 38 nuclear plants by 2030. Of that, 10 were originally expected to come from the United States, Nakanishi said.
When we formed the joint venture, the situation was that we expected a nuclear renaissance in America, with 30 new plants to be built in the United States alone, said Nakanishi, who took over the helm at Hitachi in April.
That has changed enormously, with the discovery of shale gas and big swings in fuel prices... We now don't expect any new nuclear plants in the United States in the next 10 years.
The nuclear power business has been seen as potential growth driver for Hitachi, a sprawling conglomerate of some 900 firms that has been trying to narrow its focus and rejig its business portfolio after losing money for four straight years.
Nakanishi said Hitachi was in talks with Hon Hai, one of the biggest contract manufacturers for Apple's iPhone and iPad, about an alliance with Hitachi Displays, a Hitachi subsidiary that makes small and medium-sized LCD panels.
Japan's Nikkei newspaper said on Monday that Hon Hai would buy a majority stake in the unit for about $1.2 billion.
We are talking to them, that's true, Nakanishi said, when asked about the possibility of a tie-up.
They are interested. We have no reason to refuse (to talk), he added, while declining to comment on whether the discussions were aimed at selling Hitachi's 75 percent stake in the firm.
Hon Hai issued a statement in Taiwan on Tuesday, saying that it could not comment on particular negotiations, but that if a decision was made on any large investment, it would be announced at an appropriate time.
Nakanishi said the unit needed more independence from Hitachi in order to make the large and timely investments needed to compete in the increasingly commoditized LCD panel business.
One way of doing that is an IPO. Another is a partnership with another company, he said.
Shares in Hitachi closed up almost 1 percent at 415 yen on Tuesday, before the interview was published, while the benchmark Nikkei stock average fell 0.6 percent.
(Additional reporting by Baker Li in Taipei; Editing by Edmund Klamann and Nathan Layne)