Japan is embarking on an ambitious $2.3 trillion technology strategy aimed at revitalizing its startup ecosystem and accelerating advancements in artificial intelligence, robotics, and biotechnology. This significant investment underscores a strategic pivot to foster innovation and secure global competitiveness in critical deep tech sectors.
The initiative includes a substantial ¥1 trillion ($6.2 billion) investment to support a consortium, led by SoftBank and including major players like Honda, NEC, and Sony, in developing a domestic AI foundation model. This effort specifically targets ‘physical AI,’ designed for industrial applications, highlighting Japan’s focus on leveraging AI in manufacturing and infrastructure.
In parallel, Japan is strengthening its economic security by establishing the Japan Foreign Investment Committee (JFIC) for enhanced screening of foreign investments. This move comes as China imposes new export controls on approximately 40 Japanese entities, citing ‘militarization’ concerns, which could lead to increased compliance burdens and supply chain disruptions.
The business landscape is also seeing significant developments. Kawasaki Heavy Industries is partnering with Airbus Defence and Space to develop anti-submarine drones for the Japanese Ministry of Defense. Rakuten is set to receive substantial subsidies for its low-Earth orbit satellite communications network project, aiming to bolster communication resilience.
Further contributing to the nation’s technological advancement, Kyocera plans a significant investment in ceramic parts for semiconductors and AI data centers. Meanwhile, industrial robot makers like Yaskawa Electric and Fanuc are integrating AI to enhance their global standing in factory robotics. Toyota Motor is also looking to AI for streamlining production specifications across its divisions by 2028.
These developments occur alongside broader international engagements, including new trade talks with Mercosur and an enhanced defense and economic pact with India, focusing on AI, energy security, and critical technologies. Japan’s Nippon Export and Investment Insurance (NEXI) is also providing trade insurance for a substantial loan to India’s Reliance Industries for solar and battery manufacturing, reinforcing bilateral supply chains.
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