Domestic models + tens of millions of robots! Japan launches "sovereign AI" initiative, betting $2.3 trillion on the future

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Japan is further ramping up its national artificial intelligence strategy, coupling domestic foundational model development with large-scale robot deployment in an attempt to establish autonomous capabilities in the global “sovereign AI” race, and extending AI applications from the digital realm to real-world industries.

According to newly released plans, the Japanese government aims to deploy approximately 10 million AI-powered robots across 18 industries by 2040, while also promoting the development of domestic multimodal foundational models. This plan is an important part of Japan’s growth strategy unveiled last month, totaling 370 trillion yen (about $2.3 trillion), and focuses on Physical AI, semiconductors, quantum technology, nuclear fusion, among 17 priority areas.

To ensure project implementation, Japan’s government will provide up to 1 trillion yen (about $6.1 billion) in fiscal support over the next five years. However, this funding is not a one-time commitment, but rather tied to annual phase milestones; the government will decide on subsequent funding based on project progress. This means the 1 trillion yen is more of an upper limit than a fixed final amount.

For industry, this means Japan is seeking to build a comprehensive AI ecosystem covering models, data, and robot applications, leveraging its manufacturing and robotics sector advantages.

Up to 1 Trillion Yen Invested Over Five Years, Funding Linked to Assessment

According to the Japanese government's plan, up to 1 trillion yen will be invested over the next five years to support domestic AI foundational model research and development.

Unlike traditional industrial support, this fiscal support employs a phased review mechanism. The government will annually assess project milestone completion, then decide on subsequent funding. Therefore, the final investment amount depends on project progress, not a fixed budget.

This arrangement means Japan hopes to control fiscal risk through ongoing assessment while strategically deploying resources on a large scale.

SoftBank, NEC, Sony, and Honda Jointly Develop Japanese Foundational Models

Leading the project is the Noetra alliance, officially commissioned by Japan’s Ministry of Economy, Trade and Industry (METI) and New Energy and Industrial Technology Development Organization (NEDO).

Currently, Noetra’s major shareholders include SoftBank, NEC, Sony Group, and Honda, while Fujitsu and Rakuten are considering joining. Meanwhile, the alliance is collaborating with Japan’s National Institute of Advanced Industrial Science and Technology (AIST) to drive R&D forward.

According to the plan, Noetra’s investors will eventually expand to 44 companies, spanning automotive, electronics, manufacturing, finance, logistics, and more.

The technical goal is to develop multimodal foundational models capable of processing language, images, video, and sensor data, enabling robots to understand real environments and perform tasks autonomously, rather than relying solely on preset programs.

Physical AI as Core Focus, Applications Across 18 Industries

The Japanese government updated its national AI and robot strategy this week, making Physical AI a central development focus. Physical AI refers to applying artificial intelligence in the real world—such as autonomous driving, factory automation, and humanoid robots performing practical tasks—not just limited to digital interaction on screens.

Japanese Minister of Economy, Trade and Industry Ryosei Akazawa announced that the government plans to actively promote AI robots for social applications in 18 fields, including new coverage in catering, food manufacturing, and healthcare. Akazawa stated that Japan will build and continuously improve a data infrastructure for Physical AI and robots, fully leveraging domestic industrial strengths.

Leveraging Robotics Industry to Address Population Aging Challenges

Japan’s elevation of Physical AI to the core of its national strategy is closely tied to its longstanding robotics manufacturing expertise.

According to the International Federation of Robotics, Japan is home to global leading industrial robot manufacturers such as FANUC, Yaskawa Electric, Kawasaki Heavy Industries, and accounts for about half of the world’s industrial robot production.

The density of industrial robots in Japan’s manufacturing sector ranks among the highest globally, providing a solid foundation for large-scale deployment of Physical AI. Meanwhile, as Japan’s population continues to age and the working-age population has been declining since 1995, advanced robots will become a vital tool for filling labor shortages, rather than just auxiliary devices for improving productivity.

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