The Dawn of Japan's AI Revolution
Japan is launching an unprecedented public-private partnership to develop domestic artificial intelligence technology, with a total investment of ¥3 trillion ($20 billion). In December 2025, the full scope of this ambitious national AI development plan was revealed, marking Japan's determined counteroffensive in the AI race where it has fallen significantly behind the United States and China.
By spring 2026, SoftBank will lead the establishment of a new company backed by over ten Japanese corporations to develop Japan's largest AI foundation model. The goal is audacious: achieving "1 trillion parameters"—the scale reached by the world's leading AI systems.
The Framework of the Initiative
The New Company and Its Structure
The new company will be centered around SoftBank, with approximately 100 AI engineers from SoftBank and Preferred Networks forming its core team. The immediate objective is to develop a foundation model with 1 trillion parameters, matching the scale achieved by major global AI players.
This foundation model will be made available to Japanese companies, allowing each to customize the AI for their specific needs. The ultimate aim is to develop AI systems capable of being integrated into robots, which are expected to become mainstream in the near future.
Massive Investment Plan
The Ministry of Economy, Trade and Industry (METI) will provide approximately ¥1 trillion in support to the new company over five years starting in fiscal 2026. The government plans to allocate over ¥300 billion in related expenses in the fiscal 2026 budget.
Meanwhile, SoftBank will invest ¥2 trillion over six years in data centers for AI development and deployment. Currently under construction in Tomakomai, Hokkaido, and Sakai, Osaka, these facilities are scheduled to begin operations by fiscal 2026. The investment will proceed in stages according to corporate AI demand.
Why Domestic AI Now?
Japan's Significant Lag Behind US and China
Currently, the United States and China lead AI development by a wide margin in terms of performance. According to 2024 data, US private sector AI investment reached approximately ¥16 trillion, while China invested about ¥1.4 trillion. In stark contrast, Japan's investment amounted to a mere ¥140 billion.
The gap is equally evident in research quality and quantity. China has surpassed the US in AI paper citations, and Japan's name doesn't appear among the top 100 most-cited AI papers. The reality is that Japanese AI research has fallen far behind on the global stage.
Economic Security Considerations
AI has become a technology that directly impacts industrial competitiveness and national security, ultimately determining a nation's power. METI recognizes that dependence on foreign AI carries certain risks from an industrial perspective.
Looking at Japan's current digital services landscape, much like operating systems and cloud services, the country relies heavily on foreign companies. Japan's digital trade deficit has expanded year after year, reaching ¥5.5 trillion in 2023. If commonly used generative AI remains exclusively foreign, this deficit threatens to expand further through license fees and other payments.
SoftBank's Strategy
Ongoing Domestic AI Development
SoftBank established "SB Intuitions" in October 2023 with the goal of developing the highest-quality Japanese language generative AI model. The company aims to build a 390-billion-parameter domestic LLM by the end of fiscal 2024, with plans to scale up to 1 trillion parameters in the medium to long term.
President Junichi Miyakawa explained: "Recently, the mainstream approach to building generative AI has been to first create a large-scale model and then optimize it to the appropriate size for specific purposes. Since we're following this approach, we've decided to target 1 trillion parameters."
Business Model Prospects
SoftBank believes that domestic AI development will catalyze demand for new products and services domestically, generating sufficient usage fees to justify the massive investment.
The company aims to create a "refined LLM" that understands Japanese business practices and culture while offering high accuracy, fast response times, and low power consumption.
Challenges Facing Japan
AI Talent Shortage
The average starting salary for AI doctorate holders in Japan is around ¥6 million—less than half that of the United States. Promising young researchers continue to migrate to overseas research institutions. Major automakers like Toyota and Honda must recruit AI engineers from the US for autonomous vehicle development due to domestic talent shortages.
Slow Corporate Adoption
Japan has the world's lowest AI adoption rate. Only 26.7% of Japanese respondents reported having used generative AI, dramatically lower than 68.8% in the US and 81.2% in China.
Among corporations, just 49.7% indicated they would "actively utilize" or "use in limited areas," a notably cautious stance compared to over 80% in the US and China.
Cultural Barriers
Japan's cultural tendency toward "risk avoidance" and "group harmony" creates an environment where new technologies struggle to gain traction without clearly defined rules. Workers report that "using ChatGPT at work is treated like a secret trick. There's no atmosphere where you can openly use it."
Future Outlook
This domestic AI development project has the potential to mark a major turning point for Japan's AI sector. The combination of strong government support and massive private investment might finally break through the situation where Japan has lagged behind Western nations.
However, success requires overcoming numerous challenges beyond technology development itself: talent cultivation, corporate culture transformation, and appropriate regulatory frameworks. Whether this ¥3 trillion investment can bring true innovation to Japan's AI industry remains to be seen. The outcome will determine Japan's future competitiveness.
The global AI development race continues to intensify. Whether Japan can establish a meaningful presence in this competition will become clear when the initiative launches in earnest from fiscal 2026. The world will be watching closely as Japan makes its ambitious bid to catch up in the AI race.
Reactions in Japan
Japan is finally getting serious about AI development. The ¥3 trillion scale is surprising, but considering how far we've fallen behind the US and China, it's probably a necessary investment. If anything, it's too late.
I'm a bit concerned that SoftBank is leading this. Son's vision is grand, but will it actually work out? There have been various investments in the past...
1 trillion parameters sounds impressive on paper, but the real issue is how to utilize it effectively. I doubt whether Japanese companies can actually make good use of it.
I support investing ¥1 trillion in tax money for domestic AI. Considering the risk of data flowing overseas, we need the ability to develop and operate domestically. It's important from an economic security perspective.
It's reassuring that Preferred Networks is participating. If technically competent companies are involved, there's still hope.
Is there really demand for Japanese-focused AI? Ultimately, if it can't compete in the global market, it seems pointless. I'm worried it might become another Galapagos phenomenon.
I think focusing on Japanese language could actually be a strength. AI that understands Japanese culture and business practices would be highly valuable for domestic companies. There must be areas that foreign AI can't handle.
The real issue is talent. With AI engineer salaries less than half of what they are in the US, all the talented people will go overseas. Investment is important, but we need to invest in people first.
Isn't a full launch in fiscal 2026 too late? By then, the US and China will have advanced even further. I think there's a lack of urgency.
It's embarrassing that Japan has the world's lowest AI adoption rate. Technology development is important, but first we need to create a culture of utilizing existing AI. I think changing the mindset of the older generation of managers should come first.
¥2 trillion investment in data centers in Hokkaido and Sakai is amazing. It could be positive for regional economies too. I hope it creates jobs.
In the end, Japanese companies have a culture of fearing failure, so I'm worried that even if we create AI, it won't be used. Changing the mindset is the most important thing.
It's interesting that the ultimate goal is AI for robots. Japan is strong in robotics technology, so combining that might create differentiation.
With ¥3 trillion, aren't there more necessary things? Like education or healthcare. Is this really the time to invest in AI?
AI investment is investment in the future. If we don't do it now, Japan will be completely left behind. Even healthcare and education have areas that can be streamlined with AI. We need to take a long-term perspective.
I didn't know about the ¥5.5 trillion digital trade deficit. At this rate, huge amounts of money will continue flowing overseas every year, so domestic AI development is essential.
Isn't a team of 100 people too small? Companies like OpenAI have much larger setups. Are they seriously planning to compete?
¥1 trillion in government support is good, but what happens if results don't materialize? Transparency in how tax money is used is crucial.
Personally, I'm excited. I'd like to see a Japanese company that can compete with Google and OpenAI. I want to support this.
I'm worried it'll end up like the Fifth Generation Computer project. That also involved massive investment but ended in failure. Will history repeat itself...
Japan's ¥3 trillion AI investment is impressive, but still small compared to America's ¥16 trillion investment. However, it's better than doing nothing. I'm hopeful about integration with Japan's manufacturing and robotics technology.
Starting in 2026 is too late. By then, ChatGPT and Claude will have evolved even further. Speed is always Japan's problem. They need to move faster.
Europe leads in AI regulation, but Japan focuses on technology development. Different approaches, but both are important. I appreciate Japan's emphasis on privacy.
China has already invested ¥1.4 trillion, so Japan's jump from ¥140 billion to ¥3 trillion is a huge leap. However, Chinese AI companies are growing rapidly with strong government support. Can Japan catch up?
SoftBank leading this is interesting. Masayoshi Son is one of the few Japanese leaders who truly understands AI's future. Though his investment track record has been mixed.
Focusing on Japanese language AI is a smart strategy. There are cultural nuances that English-centric AI can't handle. France should consider a similar approach.
India is also investing in AI development, but we should learn from Japan's organized approach. Public-private partnership is key to success. However, securing talent will be the biggest challenge.
From an Eastern European perspective, such large-scale investment is enviable. Our region is completely left behind in AI development. I think Japan still has a chance.
In Latin America, we have no choice but to import AI technology. Japan's ability to develop its own AI is a major strength. I think it's important for maintaining economic independence.
South Korea faces similar challenges. Japan's initiative is interesting. If our countries could cooperate, we might be able to establish a presence in Asian AI development.
Middle Eastern countries purchase AI technology from abroad. Japan's technological development capability is impressive. We also want to develop AI domestically, but lack the talent and infrastructure.
From Australia's perspective, Japan's investment scale is remarkable. But the issue isn't the amount invested—it's how it's utilized. I hope Japan's conservative corporate culture doesn't become an obstacle.
Italy is completely behind in AI development. There's much to learn from Japan's efforts. However, I question whether the goal of 1 trillion parameters is realistic.
Russia is also developing its own AI, but faces difficulties due to sanctions. Japan is in a position to leverage international cooperation. I'm envious.
Canada is also achieving excellent results in AI development on a smaller scale. With investment like Japan's, we could advance much further. Scale is important, but quality matters equally.
From Mexico's perspective, it's hard to believe Japan is 'behind' in AI. From our viewpoint, Japan is still advanced. The relative perspective is interesting.
Nordic countries are conducting efficient AI development on a small scale. Combining Japan's large-scale approach with Nordic efficiency would be ideal. Though cultural differences are significant.
African countries aren't even participating in AI development. It's good that advanced nations like Japan understand the importance of having their own AI. We hope to achieve that in the future too.
Companies like Sweden's Spotify and Skype emerged from a small country. Japan is a major nation, so with the right environment, it should be able to produce global AI companies.
Ireland hosts many foreign IT companies' European headquarters. I think Japan's attempt to build its own AI ecosystem is the right strategy long-term. Dependence is dangerous.