Local Model + 23k Robots! Japan Unveils "Sovereign AI" Grand Plan, $2.3 Trillion Bet on the Future

Japan is further intensifying its national strategy for artificial intelligence, tying the development of domestic foundational models with large-scale robot deployment in a bid to establish autonomous capabilities in the global "sovereign AI" competition and extend AI applications from the digital world to real-world industries.

The latest plan unveiled states that the Japanese government aims to deploy approximately 10 million AI-powered robots across 18 industries by 2040, while simultaneously driving the development of domestically produced multimodal foundational models. This plan is a key part of the national growth strategy announced last month, with a total scale of 370 trillion yen (approximately $2.3 trillion), covering 17 priority areas including Physical AI, semiconductors, quantum technology, and nuclear fusion.

To facilitate implementation, the Japanese government will provide up to 1 trillion yen (approximately $3.7M) in fiscal support over the next five years. However, this funding arrangement is not a one-time commitment but is tied to annual milestone targets, with the government deciding on continued funding based on project progress, meaning the 1 trillion yen is more of an upper limit than a finalized amount.

For the industry, this means Japan is attempting to leverage its strengths in manufacturing and robotics to build a complete AI ecosystem covering models, data, and robot applications.

Maximum of 1 trillion yen over five years, funding linked to assessments

According to the plan announced by the Japanese government, up to 1 trillion yen will be invested over the next five years to support the development of domestic AI foundational models.

Unlike traditional industrial support, this fiscal support adopts a phased review mechanism. The government will evaluate milestone achievements annually before deciding on subsequent funding disbursement, so the final investment amount will depend on project execution progress rather than a fixed budget.

This arrangement means Japan aims to control fiscal risks through ongoing assessments while committing large-scale strategic resources.

SoftBank, NEC, Sony, and Honda jointly develop Japan's domestic foundational model

The entity undertaking this project is Noetra, a consortium formally commissioned by Japan's Ministry of Economy, Trade and Industry (METI) and the New Energy and Industrial Technology Development Organization (NEDO).

Currently, Noetra's main shareholders include SoftBank, NEC, Sony Group, and Honda, with Fujitsu and Rakuten also evaluating whether to join. Meanwhile, the consortium is collaborating with the National Institute of Advanced Industrial Science and Technology (AIST) on R&D.

According to the plan, Noetra is expected to expand its investor base to 44 companies, covering multiple industries including automotive, electronics, manufacturing, finance, and logistics.

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

Physical AI becomes core direction, applications cover 18 industries

Japan's government updated its national AI robot strategy this week, making Physical AI a key development direction. Physical AI refers to the application of artificial intelligence in the real world, including autonomous driving, factory automation, and humanoid robots that perform actual work, not limited to digital interactions on screens.

Japan's Minister of Economy, Trade and Industry, Ryosei Akazawa, stated that the government plans to actively promote the social application of AI robots in 18 fields, newly covering industries such as food services, food manufacturing, and healthcare. Akazawa said Japan will build and continuously improve data infrastructure for Physical AI and robots to fully leverage the country's industrial advantages.

Leveraging robotics strength to address aging population challenges

The reason Japan has elevated Physical AI to the core of its national strategy is closely tied to its long-standing robot manufacturing capabilities.

According to data from the International Federation of Robotics, Japan is home to global leaders in industrial robot manufacturing such as FANUC, Yaskawa Electric, and Kawasaki Heavy Industries, with approximately half of the world's industrial robot production coming from Japan.

Japan's manufacturing robot density is already among the highest globally, providing an industrial foundation for large-scale Physical AI deployment. At the same time, as Japan's population continues to age and the working-age population has been declining since 1995, advanced robots will become a key tool to fill labor gaps, rather than just auxiliary equipment to improve production efficiency.

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