Japan Targets 30% Global Share in Physical AI Under New 2040 Strategy

Japan's Ministry of Economy, Trade and Industry (METI) has introduced a bold draft strategy to secure a 30 percent global market share in physical AI by the year 2040. The plan, presented to an expert panel on AI and semiconductors, aims to position the nation as a leader in autonomous systems that control robots and industrial machinery. This initiative is viewed as a vital pillar for future industrial competitiveness and national security. News On Japan

The strategy explicitly targets the development of domestic physical AI technologies that can operate independently in the real world. Beyond software, the government is prioritizing the expansion of semiconductor design and manufacturing within Japan to ensure a resilient supply chain. The goal is to scale domestic semiconductor sales to roughly 40 trillion yen by 2040, which is a significant increase from current levels.

This shift is largely motivated by Japan's severe demographic challenges, characterized by a shrinking working-age population and chronic labor shortages. Instead of replacing workers, physical AI is being designed as a continuity tool for essential sectors like logistics, construction, and nursing. In many Japanese industries, automation is no longer an option but a necessity for survival as the labor force continues to contract.

To facilitate this technological leap, the government has identified 17 strategic fields for prioritized investment. These include advanced semiconductors and robotics software platforms that allow machines to learn through observation. The ministry plans to finalize the full strategy by the summer of 2026, incorporating feedback from industry experts and researchers.

Financial support for the initiative is substantial, with plans for a multi-billion dollar AI support scheme starting in fiscal 2026. Lawmakers are also drafting tax incentives that would allow companies to deduct significant portions of their investments in AI and semiconductor factories. This fiscal push aims to create a self-sustaining ecosystem where hardware and intelligence are natively integrated.

Major players like Fujitsu and the state-backed foundry Rapidus are already working on next-generation chips to power these systems. By focusing on the entire system to silicon pipeline, Japan hopes to reduce its reliance on overseas manufacturers for high-end components. This strategy represents a comprehensive attempt to reclaim Japan’s status as a global technology powerhouse in the age of intelligent machines.