Japan is moving to sharply accelerate its domestic artificial intelligence capabilities, unveiling plans for a ¥1 trillion ($6.3 billion) state-backed investment programme aimed at building home-grown AI technologies and reducing reliance on foreign platforms.
According to officials familiar with the initiative, the funding—spread over five years and starting in fiscal year 2026—will support the establishment of a new AI company formed by a consortium of around ten Japanese firms, including SoftBank Group. The venture is expected to focus on developing Japan’s most advanced foundation AI model through close coordination between the public and private sectors.
The programme reflects rising concern in Tokyo that Japan risks falling behind global AI leaders such as the United States and China, as artificial intelligence increasingly shapes economic competitiveness, industrial productivity, and national security. Policymakers now regard AI as a strategic technology comparable to energy or semiconductors.
Roughly 100 engineers from SoftBank and AI start-up Preferred Networks are expected to join the new company, bringing expertise in large-scale computing, machine learning, and industrial AI applications. Government backing will also help the venture secure access to advanced semiconductors, a critical constraint as global competition for high-end chips intensifies.
Japan has long been seen as lagging behind peer economies in the widespread adoption and commercialisation of AI, particularly in cloud-based and data-intensive applications. In response, the government is drafting a comprehensive national AI strategy that prioritises domestic model development, expansion of data centre infrastructure, and tighter integration between research institutions and industry.
A notable pillar of the plan is the promotion of “physical AI”—the integration of artificial intelligence with robotics and automated systems. Officials see this as an area where Japan can regain a global edge by building on its established strengths in manufacturing, precision engineering, and industrial automation.
The strategy, expected to receive Cabinet approval in the coming months, is designed to position Japan as a serious contender in next-generation AI while reinforcing long-term economic resilience. By anchoring AI development at home, the government hopes to narrow the digital gap, strengthen technological sovereignty, and ensure that future productivity gains remain firmly rooted in the domestic economy.
