METI's FY2026 budget allocates ¥1.23 trillion ($7.9B) for AI and semiconductors — nearly quadrupling previous support. ¥387.3B targets domestic foundation models, data centers, and physical AI for robotics. Separately, ¥1 trillion sovereign AI initiative funds a new entity formed by ~10 companies including SoftBank to build Japan's most advanced foundation model with 1 trillion parameters.
Japan's Growth Strategy Headquarters, chaired by PM Takaichi, identifies 61 specific products and technologies across 17 strategic sectors. The list includes physical AI systems, regenerative medicine, quantum computing, and marine drones. Part of ¥21.3T stimulus package with ¥7.2T earmarked for strategic investment in AI, semiconductors, quantum, defense, and energy.
Microsoft commits $10B to Japan over 2026-2029 — its largest-ever Japanese investment — explicitly framed as sovereign AI infrastructure. Partners with Sakura Internet (which receives ¥50.1B / $324M from METI) and SoftBank for in-country GPU supply. Sakana AI closes Series B at ¥32B ($200M) on April 9. METI joint venture with 10+ domestic firms gets $6.6B over 5 years.