JAPAN Trends and Developments Contributed by: Haseru Roku and Yoshiteru Matsuzaki, Nagashima Ohno & Tsunematsu
Recognising AI chip capabilities as critical to eco- nomic security, the government-backed GENIAC programme allocated JPY72.5 billion across six pro- viders. KDDI, Sakura Internet and Highreso formalised the Japan GPU Alliance in October 2025, creating a resource-sharing framework among major providers. Layer 2: computational capacity infrastructure Computational capacity infrastructure comprises cloud platforms – infrastructure as a service (IaaS) and artificial intelligence as a service (AIaaS) – and their underlying physical foundation: real estate, construc- tion, power systems and operational management. This convergence of technology services and physical infrastructure creates distinct cross-sector strategic Foundation models – large language models and multimodal AI systems – significantly influence com- petitive positioning across AI-dependent industries. Strategic investments in foundational language mod- els reflect market recognition that control over base model capabilities will significantly influence competi- tive positioning across all downstream applications. International market access through strategic capital Japanese enterprises pursue global market access through strategic commitments to leading internation- al models. SoftBank’s Vision Fund committed billions of dollars cumulatively to OpenAI through partnerships announced in September 2024, subsequently estab- lishing the SB OpenAI Japan joint venture in February 2025. The joint venture exclusively markets OpenAI’s foundation model capabilities in Japan through Cristal Intelligence, targeting the automation of over 100 mil- lion workflows across financial reporting, document dynamics (covered below). Layer 3: foundation models creation and customer inquiry management. Domestic foundation model development Japan’s AI sovereignty strategy manifests through strategic development of domestic foundation model capabilities. Sakana AI’s investment trajectory exem- plifies this approach. NVIDIA’s investment in Septem- ber 2024 elevated the start-up to unicorn status within a year of having been founded. Strategic investments from Japan’s three major megabanks and over 30 leading corporations exceeded JPY30 billion in Series
A funding. Continued investor interest – with report- ed valuation discussions exceeding USD2 billion in late 2025 – underscores the strategic importance of domestic foundation model development for Japan’s AI sovereignty objectives. This dual strategy – international market access com- bined with domestic capability development – allows Japanese enterprises to secure access to leading foundation models while reducing long-term depend- ency on foreign foundation models and supporting national economic security objectives. Application-oriented layer: partnership-dominant with strategic exceptions Layer 4 (AI applications) exhibits contrasting charac- teristics to layers 1–3, favouring partnership struc- tures: • use case uncertainty – technology and commercial immaturity mean that it remains largely unproven as to which applications will generate sustainable economic value; • early-stage development – applications remain in the early stages such that collaboration between business enterprises and technology companies enables shared risk and parallel capability develop- ment; and • rapid technology evolution – foundation model advancement may mean that application-layer dif- ferentiation becomes obsolete, favouring flexible partnership approaches over permanent capital commitments. These characteristics help explain why Japanese investments in application layers predominantly favour partnerships and joint ventures. However, plat- form acquisitions occur where new market entrants lack operational capability and established customer ecosystems to access markets directly. Conversely, incumbent manufacturers pursue selective partner- ships and minority investments that leverage existing competitive positions while maintaining technological flexibility as industry standards emerge.
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