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Japan Embraces ‘Sovereign AI’ Strategy Amid Rising Global Competition

Japan is embracing a government-led approach to artificial intelligence development as part of a global trend toward “sovereign AI,” according to a new McKinsey report published Wednesday.

The McKinsey 2025 Technology Trends Outlook identifies sovereign AI as gaining significant international traction, with countries seeking to develop domestic AI capabilities using their own data, infrastructure and workforces. This approach aims to address national priorities while reducing exposure to geopolitical risks.

Japan has invested trillions of yen in domestic AI, chip and infrastructure development as part of this strategy. The country has already deployed AI for earthquake risk assessments and emergency communications, with officials hoping the technology will help address Japan’s chronic labor shortage and boost business competitiveness.

In February 2024, the Ministry of Economy, Trade and Industry launched the Generative AI Accelerator Challenge to strengthen Japan’s platform model development capabilities. The same month saw the creation of the AI Safety Institute to monitor and develop global standards.

However, AI adoption in Japan remains slower than in other major markets. Only 26.7% of Japanese people used generative AI in fiscal 2024, compared to 81.2% in China and 68.8% in the United States, according to a government white paper on information and communications.

Similarly, just 49.7% of Japanese companies plan to use generative AI, while more than 80% of firms in the US and China intend to adopt the technology. Despite this cautious approach, major Japanese companies including SoftBank and Fujitsu have invested heavily in AI development.

The McKinsey report notes that organizations globally still have significant untapped potential in generative AI implementation. The consulting firm attributes this gap to the time required for organizational adaptation, complementary innovations and workforce reskilling.

Sazid Kabir

I've loved music and writing all my life. That's why I started this blog. In my spare time, I make music and run this blog for fellow music fans.