Source: AFP
Massive foreign and domestic investment offers Japan a chance to reclaim its tech crown, but to become a compelling alternative to China, the country must embrace rapid innovation, experts say.
US tech giants are pouring billions of dollars into artificial intelligence, cyber security and chip manufacturing in Japan, which dominated the hardware industry in the 1980s.
Google launched a regional cyber defense hub in the country last month, and Amazon Web Services is spending $14 billion to expand its Japanese cloud infrastructure.
And in the latest move, this week saw Microsoft, an OpenAI partner that builds ChatGPT, commit $2.9 billion to boost the country’s AI capability.
“Geopolitical tensions have made Japan a more attractive and stable partner compared to China,” said Khos-Erdene Baatarkhuu, CEO of fintech company AND Global.
“Japan’s technology sector, once a leader, has lost ground due to a slower response to digital and mobile trends” compared to neighbors such as South Korea, he told AFP.
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But “now, with supportive government policies, resilient startups and a potentially changing global tech scene, Japan has a chance to regain its technological edge.”
However, it is not there yet. Japan was ranked 32nd in the latest global ranking of digital competitiveness by the Swiss management school IMD.
And only seven Japanese companies appear among more than 1,200 tech “unicorns” — startups valued at more than $1 billion — tracked by CB Insights.
A “perfection-seeking approach” and a preference for “stability and incremental improvement” among businesses are partly to blame, Khos-Erdene said.
“Traditional corporate culture in Japan tends to be seamless and hierarchical, which can stifle the rapid innovation typically seen in the software industry.”
Microchip “revival”
Masayoshi Son, CEO of Japanese technology investment vehicle SoftBank Group, has warned that the country could be left as a “goldfish” if it ignores artificial intelligence.
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“Wake up Japan!” he said at a company event in October. “I want to be on the side of evolution.”
Son and tech titans including Apple boss Tim Cook and Amazon founder Jeff Bezos joined Japanese Prime Minister Fumio Kishida and US President Joe Biden at a dinner in Washington on Wednesday.
Source: AFP
At a summit that day, Kishida and Biden had vowed to strengthen “our shared role as global leaders in developing and protecting critical and emerging next-generation technologies.”
They also agreed to work with “like-minded countries to strengthen global semiconductor supply chains” in a joint statement.
Semiconductors, which power everything from cellphones to cars, have become a key battleground in recent years.
The United States and some European countries have blocked exports of high-tech chip technology to China over fears of military use.
Meanwhile, Taiwanese chip giant TSMC is facing pressure to diversify its output from customers and governments worried about the possibility of China invading Taiwan.
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TSMC opened a new $8.6 billion chip factory in southern Japan in February and plans a second $20 billion facility for more advanced chips.
On a visit to TSMC’s factory this month, Kishida said he “felt firsthand the revival of our country’s semiconductor industry.”
Japan has spent 3.9 trillion yen ($25 billion) over the past three years on chip-related subsidies — a larger share of gross domestic product than the United States or Germany.
Japanese companies including Sony and Toyota are also working with US giant IBM on a semiconductor project called Rapidus, which aims to mass-produce two-nanometer logic chips in Japan by 2027.
‘Crossroads’
“It’s a great time to invest in Japan” with the yen at a 34-year low, said Hideaki Yokota, vice chairman of the IT think-tank MM Research Institute.
Tech companies hope the country can become their “best partner in Asia”, while its workforce has many highly educated engineers ready to be bought, he told AFP.
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Established Japanese businesses, especially in the automotive and home appliance sectors, provide real opportunities to make AI profitable, he said.
Source: AFP
But Khos-Erdene warned that Japan should not rest on its heritage as a manufacturer, given its low labor productivity and shrinking workforce.
“As the CEO of a technology company, I see Japan at a crossroads,” he said, with the question not whether but how quickly the country can become “a producer, not just a consumer, of these transformative technologies.”
Microsoft plans to offer artificial intelligence training to three million of Japan’s population of 125 million.
Japanese and American universities are also collaborating on new technology research projects funded by global companies such as Nvidia and Arm.
“Overall, Japan’s commitment to AI has enormous potential for economic revitalization,” said Khos-Erdene.
“By fostering collaboration, retaining top talent and learning from successful models like the US and China, Japan can bridge the AI ​​gap and re-establish itself as a major force in the global technology landscape.”
Source: AFP