Japan’s AI Market: Spearheading Industry Innovation

8 min readSep 13, 2023

By Paola Marisela González (28/01/2021)

Around the world, Artificial Intelligence is constantly expanding, as it finds its way into diverse areas like security, manufacturing, marketing, healthcare, education, agriculture and infrastructure, to mention a few. Here, we delve into the AI market in Japan.

What does Japan’s AI sector look like?

Japan’s AI Sector has mainly focused on robotics as sub-domains of artificial intelligence, developing AI especially in the areas of technology for medical and industrial purposes. Using machine-intelligence and human-thinking abilities, Artificial Intelligence is a technology that can process various data to make predictions, recommendations and decisions.

According to the Nomura Research Institute, Artificial Intelligence in Japan is set to see exponential growth, and by the year 2035, half of all jobs in Japan could be performed by AI robots. However, while the AI market in Japan has been focusing on robotics, overseas companies have concentrated more on software development, an area of opportunity for overseas businesses looking to enter the AI market in Japan.

What are the challenges faced by AI developers in Japan?

The current challenge for manufacturers in Japan’s AI Sector is figuring out how to implement a perspective of developing robots that are customised to fulfil users’ needs. Furthermore, the latest trends of the AI market in Japan are veering towards the production of self-driving cars, drones, smart cities and factories in the coming years, besides continuing the development of AI oriented to the service industries, including healthcare and long-term care services.

Technological progress in Japan has been made possible through studies produced by research centres like AIST (the National Institute of Advanced Industrial Science and Technology) and RIKEN, Japan’s largest comprehensive research institution, where different projects relating to Artificial Intelligence in Japan are regularly carried out.

Innovative AI companies in Japan

More than 300 companies make up the AI market in Japan, including large competitive enterprises, small to mid-sized companies and start-ups. Some of the main ones are:

NEC

Based in Tokyo, NEC is a leader in the integration of IT and network technologies that has been active in AI research since the 1980s. They provide sensors, computing, networking and analysis that brings technological solutions to benefit society. Their active data solutions are able to predict, monitor, and solve challenges, responding intelligently to adverse events. They offer smart solutions in diverse areas such as aerospace, aviation, broadcasting, healthcare, retail, and telecommunications, among other sectors.

Abeja

Another company working with Artificial Intelligence in Japan is a start-up called Abeja. Founded in Tokyo in 2012, they have supported AI implementation for over 150 companies, across such diverse industries as; manufacturing, infrastructure, logistics, and retail. Besides this, they have raised more than $45.4 million USD from investors like Google and Nvidia. Abeja is a platform that integrates AI technologies with accumulated data. They are focused on the areas of machine learning / deep learning, as well as retail store analysis.

Moneytree

Moneytree is a personal finance management app available for iOS and Android, where users can sync their financial accounts. The app links to bank accounts, credit cards, digital money, loyalty points, superannuation, and cash spending. Using AI technology, the app automatically categorises and analyses the time, date, place and size of each purchase across multiple accounts, providing valuable historical information and current analytics. Moneytree covers 2600 services from all over Japan maximising the potential of financial services through data aggregation, open banking and fintech solutions.

Softbank Robotics

Softbank Robotics is the robotics division of Softbank that develops humanoid robots for consumer and enterprise applications relevant to the fields of education, business and personal use. Nowadays, they have offices in Tokyo, Paris, London, San Francisco, Boston, Shanghai, Beijing, Shenzhen, Hongkong, Singapore, Seoul, and Sydney.

There are currently over 35,000 SoftBank Robotics robots used in more than 70 countries offering innovative applications for retail, tourism, healthcare, finance, education, facilities management and cleaning. Their main products are Nao, Pepper, and Romeo. These robots incorporate sensors, microphones, speakers, cameras, and speech recognition technology to provide assistant according to the customer’s needs.

Smart cities and the AI market in Japan

Smart Cities have appeared as one of the most ambitious projects in the AI market in Japan. The development of Smart Cities responds to a growing concern about environmental issues and the creation of local solutions for energy management. The Japanese Ministry of Economy, Trade and Industry (METI) has been investing in the increasing numbers of Smart City projects since 2010, and independently subsidised projects have emerged too, increasing the research in the field of renewable energies and sustainable lifestyle solutions.

The construction of Smart Cities also represents a business opportunity for European companies that are expert in power transmission technology and data management, which are areas that have not been exploited in Japan’s AI Sector.

One example of an upcoming Smart City project by Toyota is the Woven City, due to be constructed at the base of Mt. Fuji in Japan. The 175-acre city will act as a “living laboratory”, hosting full-time residents and researchers who will test and develop technologies in the areas of autonomy, robotics, personal mobility and smart homes in a real-world environment.

The residents of the city will include 2,000 Toyota employees and their families, retired couples, retailers, and scientists. They will live in smart homes with in-home robotics systems to assist with daily living, and with sensor-based artificial intelligence to monitor their health and take care of other basic needs. The city will be completely sustainable, with energy powered by hydrogen fuel cells and roads for self-driving vehicles.

Woven City is expected to be ready to receive occupants within five years and will provide an opportunity to realise the potential of Artificial Intelligence in Japan. Nevertheless, one of the aims of the city is to encourage human connection, and for that reason, it will include multiple parks and a large central plaza for social gatherings.

Japan’s AI-powered robots to the rescue during Covid-19

Due to Covid-19, the AI market in Japan has provided a number of technological solutions for remote access, automation, and social distancing. To contribute to social distancing requirements, use of e-payment and video analytics services incorporating AI have increased. Additionally, remote working has given rise to the need for digitisation solutions, including e-document management and IoT systems where connected sensors are automatically able to gather and analyse business data.

In the healthcare industry, for instance, teleconsulting and virtual consultations have become increasingly popular as many people find it preferable to stay home rather than going out to visit a doctor. Furthermore, AI is also providing alternatives for the reduction of manual labour. In this area, robots which can replace human work, are being implemented across many business areas such as manufacturing, retail, hospitality and healthcare.

The robotics in Japan’s AI sector have presented options that reduce human contact and have seen implementation worldwide. Some examples are the robots produced by Softbank Robotics. For instance, Servi is enjoying increasing popularity in the restaurant sector, as it provides waiting services devoid of physical human contact. On the other hand, Pepper is a robot optimised for engaging with people through conversations and a touch screen. It is capable of recognising faces and basic human emotions to welcome, inform and entertain people in an innovative way.

Now, Pepper is being used in many establishments around the world to welcome customers, detecting whether they are wearing a mask or not. It is able to kindly remind customers to wear masks while screening people’s temperature through a thermal camera. Within the healthcare space, Pepper can support doctors, nurses and hospitals by automating repetitive tasks, and it is helpful in maintaining the link between patients and their families, in particular those who are confined to places such as nursing homes. Furthermore, Pepper is very easy to wipe down using alcohol-based disinfectant wipes.

Opportunities in Japan’s AI sector

Japan’s AI Sector has been at the forefront of hardware development, including the production of robots and automobiles. However, companies from Europe and the United States continue to lead when it comes to software development.

Due to Covid-19, people’s interests and priorities relating to AI have changed. For instance, AI that supplements human labour was previously limited to specific outlets because people tended to appreciate face-to-face interaction in business. However, nowadays, technological solutions that offer reduced physical interaction are preferred. Therefore, it’s a good time to consider cooperation between Japanese and European companies, making the most of their respective strengths. European AI companies that have developed deep learning algorithms could contribute to the Japanese automotive and video game industries, providing software solutions that have not yet been explored within Japan’s AI market.

There is also a trend towards software platforms becoming open-sourced since multi-party collaborations can research and utilise AI more efficiently than working alone. This will bring about further contribution opportunities between European and Japanese AI companies in areas such as; automated driving technology, marketing, information services, security, and image recognition.

For these reasons, European companies developing AI technologies can provide attractive solutions within these fields in Japan. Setting up partnerships with local industry players can represent a positive step forward.

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