Japan Unveils ¥1 Trillion Push for Home-Grown AI

Japan is preparing a major state-backed investment to accelerate domestic artificial intelligence development, with the government set to provide around ¥1 trillion ($6.34 billion) in funding over five years, according to a source familiar with the plans.

The initiative will support the creation of a new AI company, expected to be formed by a consortium of roughly 10 firms, including SoftBank Group.

The venture aims to develop Japan’s most advanced foundation AI model through close public–private cooperation, strengthening the country’s technological independence.

The funding program is scheduled to begin in fiscal year 2026, which starts in April, and reflects Tokyo’s growing urgency to compete with global AI leaders such as the United States and China. Japanese policymakers increasingly view artificial intelligence as a strategic technology with direct implications for national security and economic competitiveness.

About 100 engineers from SoftBank and AI start-up Preferred Networks are expected to join the new company, the source said. Government support is also intended to help the venture secure advanced semiconductors, as global competition for chip supplies intensifies.

Japan has lagged behind other major economies in the adoption and deployment of AI technologies. In response, the government is drafting a comprehensive national strategy that emphasizes the development of domestic AI capabilities and the expansion of data center infrastructure to bolster national strength and narrow the digital gap.

The plan, which is expected to be approved by the Cabinet in the near future, also highlights “physical AI” as a strategic priority. This emerging field integrates artificial intelligence with robotics, an area where Japan aims to regain leadership by leveraging its strong manufacturing and automation base.

Officials hope the initiative will position Japan as a serious global contender in next-generation AI, while reducing reliance on foreign technologies and reinforcing long-term economic resilience.