Japan is accelerating efforts to build domestic AI capabilities, with SoftBank and major industrial partners forming a new company focused on physical AI to power robots, vehicles, and factory systems. Referred to as the Japan AI Foundation Model Development, the new venture was established by SoftBank, NEC, Honda Motor, and Sony Group, each holding stakes of more than 10%, according to Nikkei Asia and TechWire Asia. Additional investors include Nippon Steel, Kobe Steel, and major Japanese banks such as MUFG, Sumitomo Mitsui, and Mizuho, reflecting broad backing from Japan's industrial and financial sectors.
The company will reportedly focus on developing advanced AI processing capabilities in Japan to improve robotics and automotive functions, marking a coordinated push to catch up with the US and China in AI commercialization. Unlike conventional AI models, the system is being designed specifically for real-world control tasks, including robot arms and factory automation. A key differentiator of the project is the integration of AI developers and end users. According to Nikkei Asia, SoftBank and NEC will lead model development, while manufacturers such as Honda will provide direct input from factory floors to ensure practical deployment. Honda is also expected to be among the first to implement the technology in autonomous vehicles.
The company plans to employ around 100 engineers and develop a large-scale AI model with approximately one trillion parameters by the end of the decade, targeting widespread adoption by fiscal 2030, Nikkei Asia reports. This would exceed the scale of existing Japanese models, which are currently limited to around 700 billion parameters.
The model will be trained on domestic data and deployed within Japan's industrial systems without relying on foreign cloud platforms, a move aimed at reducing dependence on US and Chinese AI ecosystems, according to TechWire Asia. Japanese firms have increasingly relied on foreign models such as those from OpenAI, Google, and Alibaba, creating the urgency behind domestic development efforts.
Government support is expected to play a major role. Japan plans to allocate approximately JPY1 trillion (US$6.3 billion) over five years for AI development starting in fiscal 2026, and the new company is expected to apply for funding through the New Energy and Industrial Technology Development Organization (NEDO). Nikkei Asia reported that selected projects could transition into public-private partnerships, with potential broader access to developed models.
The push for physical AI is also driven by structural economic pressures. According to TechWire Asia, Japan faces a projected labor shortfall of 11 million workers by 2040 amid a rapidly aging population, making automation a critical priority. The government aims to capture a 30% share of the global physical AI market by 2040, leveraging Japan's existing strength in industrial robotics. Japan's physical AI market, valued at about US$307 million in 2025, could grow to US$6.76 billion by 2035, aligning with the consortium's 2030 deployment timeline.
Despite SoftBank's significant investments in US-based AI firms, including OpenAI, the company is pursuing a parallel domestic strategy. According to TechWire Asia, this reflects a broader sovereign AI approach aimed at maintaining control over sensitive industrial data and reducing reliance on foreign platforms.
Article edited by Jerry Chen
