Japan's tech giants unite to build trillion-parameter Physical AI model for robots and machines

Japanese Tech Giants Launch Major Joint Venture for AI Development

SoftBank, NEC, Sony Group, and Honda have established a new company called Japan AI Foundation Model Development, marking one of the most significant collaborative efforts in Japanese AI history1

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. Each of the four Japanese tech giants holds more than a 10% stake in the venture, which aims to develop a trillion-parameter AI model specifically designed for Physical AI applications3

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. The joint venture for AI will hire approximately 100 AI engineers, with a senior SoftBank executive serving as president2

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The initiative has attracted substantial backing from Japan's industrial and financial sectors. Nippon Steel, Kobe Steel, MUFG Bank, Sumitomo Mitsui Banking, and Mizuho Bank are all listed as investors, signaling broad-based support across multiple industries1

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. Tokyo-based AI developer Preferred Networks, respected for its deep learning expertise, is also involved in the project2

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Government Funding Backs Domestic AI Rollout

The venture is expected to apply for funding through NEDO, Japan's New Energy and Industrial Technology Development Organization, which began accepting proposals in late March3

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. The government funding program has earmarked approximately ¥1 trillion—roughly $6.28 billion—to support domestic AI rollout over five years starting fiscal 20261

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. Japan AI Foundation Model Development is considered a near-certain pick for this substantial government backing1

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This financial commitment reflects Japan's determination to narrow the gap with U.S. and China AI leaders who currently dominate the global landscape4

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. The initiative addresses what Japanese policymakers view as a critical vulnerability: the country's longstanding reliance on foreign cloud infrastructure that has created a "digital deficit," draining capital while leaving Japanese industry dependent on U.S. tech stacks1

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Physical AI Focus Sets Japan Apart from Conversational Models

Unlike the language models that power ChatGPT, this high-performance AI targets what the industry calls Physical AI—systems designed to control autonomous machines, drive cars, operate robot arms, and run factory automation at scale2

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. Japan believes its deep industrial base and decades of robotics heritage provide a natural advantage that Silicon Valley and Beijing cannot easily replicate1

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SoftBank and NEC will lead the actual AI development work, while Honda plans to deploy the results in autonomous vehicles as the first major application2

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. Sony Group brings its expertise in robotics and gaming hardware to the collaboration1

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. The companies are targeting practical Physical AI applications by 2030, according to local reports1

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Sovereign AI Strategy Keeps Japanese Data Domestic

The venture embodies a sovereign AI approach, with plans to train AI models on Japanese data that stays within Japan, rather than feeding into OpenAI or Google's pipelines1

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. This represents a pointed shift away from years of Japanese companies sending data to U.S. cloud infrastructure and paying for the privilege2

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The sovereign AI angle creates an interesting contrast with SoftBank's global investment strategy. The firm led OpenAI's $40 billion funding round in 2025 and recently secured a $40 billion bridge loan to fund further investments in the ChatGPT maker4

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. Now it sits on the other side of the table, anchoring a domestic model meant to chart a path independent of the same American AI ecosystem it has been bankrolling1

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Global Competition Intensifies for AI for Robots and Machines

Physical AI is attracting significant attention globally as companies recognize its potential to transform manufacturing, logistics, and transportation. Tesla is building its own robots, while OpenAI supports various AI and robotics startups1

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. China's political plans include massive investments in this area, and earlier this year, stablecoin company Tether invested in humanoid robotics startup Generative Bionics, which markets its machines as Physical AI systems designed to fuse robotics with intelligence that perceives and acts in the world1

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The new company will initially make its high-performance AI available to Japanese companies for broad use, with plans to expand into factory robotics and other applications as the technology matures3

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. Industrial firms investing in the venture stand to benefit from early access to AI systems tailored for manufacturing and automation challenges specific to Japanese industry2

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