Japan targets $65bn in public-private physical AI investment by 2040
The Japanese government has announced a public-private investment target of ¥10 trillion (around $65bn) by 2040 in 'physical AI' — covering robotics, autonomous vehicles and industrial machinery. The plan is positioned as a response to China's large-scale subsidies in the same domain. Toyota, Fanuc, SoftBank and Mitsubishi Electric have made the first concrete commitments.
Japan's Ministry of Economy, Trade and Industry (METI) on Friday released its 'Physical AI Strategy' paper, setting a public-private investment target of ¥10 trillion (about $65bn) by 2040. The document focuses on a hardware-led approach that embeds AI into robotics, autonomous vehicles, industrial machinery and home appliances. METI officials said the plan aims to make up in physical AI for time lost in the digital-AI race.
The government's direct share is set at ¥3 trillion, with the rest funded by private investment and international joint ventures. Toyota, Fanuc, SoftBank and Mitsubishi Electric announced first commitments. Toyota will spend around ¥800bn on robotics R&D, Fanuc ¥350bn on factory automation, SoftBank ¥500bn on autonomous logistics and Mitsubishi Electric ¥450bn on grid-scale industrial AI.
Strategically, the plan is positioned as a direct response to China's 2030-horizon physical-AI subsidy package. The United States and Germany are reportedly preparing similar industrial strategies. For investors, Toyota, Fanuc, SoftBank and Mitsubishi Electric opened up 2.1%, 3.6%, 1.4% and 1.8% respectively on the Tokyo Stock Exchange.
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