Inside Japan's Struggle To Build Sovereign AI

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Developing domestic AI capacity also helps reduce foreign influence over critical national functions. As AI technologies become more embedded in critical infrastructure and national defense systems, reliance on foreign providers increases the risks of interference or vulnerability during crises.

Moreover, developing domestic models and data facilities can help reduce the risk of foreign access to sensitive information. Since the training of AI models requires vast volumes of data that often includes sensitive data, governments can better safeguard and govern access to that data by promoting AI technologies and infrastructure domestically.

Finally, sovereign AI carries major economic implications. As UNCTAD and other reports estimate, the global AI market is expected to surge in the coming decades. By cultivating domestic AI enterprises, countries can capture a greater share of the resulting economic value – rather than allowing it to flow to foreign technology providers.

In recent years, a growing number of countries have joined the sovereign AI race. These include not only established AI investors such as the UAE , Taiwan and Singapore , but also emerging players like Vietnam , Thailand and Indonesia .

AI policy pillars

Japan's AI Strategy 2022 outlines the government's broad ambition to harness AI to boost industrial competitiveness and tackle national and global challenges. While the government strategy does not explicitly use the term“sovereign AI”, it advances three core initiatives aimed at fostering an indigenous AI ecosystem.

The first is the Ministry of Economy, Trade and Industry's (METI's) Cloud Program , launched under the Economic Security Promotion Act . Backed by more than 100 million yen ($6.8 million), the program designates cloud services as“Specified Critical Products” and subsidizes domestic providers to reduce foreign reliance.

The Cloud Program's implementation emphasizes the risks of market concentration among dominant foreign providers and aims to raise Japan's domestic GPU cloud service sufficiency from the current level of 30%.

Funding has already been allocated to leading firms and institutions-including GMO, Sakura Internet, Softbank, KDDI, and the University of Tokyo-to expand GPU-equipped data centers across the country.

The second initiative is the development of ABCI 3.0 , a public supercomputer built by the National Institute of Advanced Industrial Science and Technology (AIST).

Funded with 36 billion yen ($232 million) through METI's Economic Security Fund, ABCI 3.0 is the third generation of Japan's open computing infrastructure designed for AI development and real-world application bridging.

The mainframe, constructed by Hewlett-Packard Enterprise (HPE) and powered by Nvidia's GPUs and network system, delivers a theoretical peak performance of approximately 6.2 exaflops (half-precision, 16-bit). This makes it the most powerful public supercomputer in Japan to date.

Since January 2025, AIST has offered ABCI 3.0 access to companies and universities for foundational model development. AIST also plans to develop its own multimodal AI models using the supercomputer for societal and industrial use.

The third pillar is the Generative AI Accelerator Challenge (GENIAC) , a METI-sponsored accelerator program aimed at supporting domestic foundational model projects.

GENIAC aims to strengthen Japan's competitiveness in foundational AI by providing computing resource assistance, supporting demonstration projects for data utilization, organizing matching events and facilitating collaboration with global tech companies for selected start-up and research projects.

Since its launch in February 2024, two rounds of GENIAC's six-month cycle have assisted 30 projects. The selected projects include the development of LLMs specifically designed for processing the Japanese language, autonomous driving systems optimized for domestic traffic conditions, and foundational model technologies in research and industry activities.

Shortages and shortfalls

Despite these investments, Japan's path to sovereign AI is far from straightforward. The country still faces significant challenges in reaching its AI goals.

One major obstacle is the shortage of skilled IT labor. Like many other countries , Japan struggles to meet the rising demand for IT workers. METI projects that by 2040, Japan will face a shortfall of 3.2 million workers in AI and robotics technologies.