Japan’s tech sector has taken a bold step away from developing conversational AIs like ChatGPT. On Sunday, SoftBank, NEC, Honda, and Sony Group formed an alliance to create a trillion-parameter AI model designed to enhance machinery rather than engage in dialogue. This initiative reflects Japan’s commitment to ‘Physical AI,’ which focuses on controlling robots, vehicles, and industrial operations instead of generating text.
With its robust industrial history and robotics expertise, Japan believes it holds a competitive advantage over tech hubs like Silicon Valley and Beijing. According to reports, SoftBank and NEC will spearhead the development efforts. Honda is set to implement these advancements in autonomous driving, while Sony contributes robotics and gaming technology. The Tokyo-based AI firm Preferred Networks also plays a key role. The new company, named something akin to ‘Japan AI Foundation Model Development’ in English, aims to employ approximately 100 AI engineers under a SoftBank executive’s leadership.
The initiative garners support from major financial institutions and industrial players, including Nippon Steel, Kobe Steel, MUFG Bank, Sumitomo Mitsui Banking, and Mizuho Bank. The government-backed NEDO agency will channel around ¥1 trillion (approximately $6.28 billion) into AI research over five years starting in fiscal 2026, with Japan AI Foundation Model Development as a top contender for the funds.
For years, Japan has relied on U.S.-based cloud infrastructure and incurred significant costs associated with this dependency, known as the ‘digital deficit.’ The new venture intends to train AI using Japanese data domestically rather than feeding into platforms like OpenAI or Google. This strategy contrasts sharply with SoftBank’s previous global investments, including its $40 billion contribution to OpenAI in 2025.
The concept of Physical AI is gaining traction worldwide. Tesla has initiated robot development, and OpenAI supports robotics startups. China has also signaled substantial investments in this domain. Earlier this year, Tether invested in Generative Bionics, a humanoid robotics firm that integrates intelligence with physical interaction capabilities beyond mere response generation.
The timeline for practical Physical AI applications targets 2030, as per local media. With NEDO’s funding program proposals open since late March, the project is already underway.