On June 19, the Japanese government unveiled a plan to channel 10.5 trillion yen ($65.1 billion) of combined public and private investment into physical AI across 17 strategic sectors by fiscal year 2040, according to Nikkei Asia.
This is the fifth major policy step taken by Prime Minister Sanae Takaishi’s government in just four days.
On June 16, the Bank of Japan raised interest rates to 1%, a move Cryptopolitan reported It could reshape Japan’s position in global cryptocurrency markets. On the same day, METI and the Ministry of the Environment began searching Mandatory electric car battery assembly diagram. On June 18, Japan Bankers Association Increased threats from AI-powered cyberattacks have been reported.
Before that, earlier on June 19, the AI Strategic Headquarters issued a draft proposal for continuous evaluation of AI-related laws. Together, these actions outline a coordinated effort that includes monetary policy, industrial investment, environmental regulation, and cybersecurity.
Japan turns physical AI into national growth plan
The actual investment in AI will be divided between the public and private sectors and distributed among 17 strategic sectors identified as priorities by the Takaishi government, Nikkei Asia reported.
In November 2024, Japan announced a 10 trillion yen investment fund targeting the artificial intelligence and semiconductor industries, with nearly 3.9 trillion yen earmarked for domestic chip manufacturing and AI chip production and more than 1.2 trillion yen for research and development in robotics and automation systems, according to an Acumen Research and Consulting analysis published by ABNewswire.
The Japanese Cabinet adopted the National Basic Plan for AI in December 2025, officially recognizing physical AI and humanoid robotics as national strategies for the first time. This classification changed investments from voluntary R&D by companies to nationally oriented programmes.
Shrinking workforce forces push for robotics
The connection between Japan’s interest in physical AI and its demographics is undeniable. According to Acumen Research estimates, Japan will lose about 15 million of its working-age population over the next 20 years. Japan’s population has been declining since 2000, and at present the proportion of working-age people in Japan is 59.6%.
The robotics sector is already responding. Japan maintains one of the highest robot densities in the world, with 419 robots per 10,000 manufacturing workers and an installed base of 435,000 industrial units, according to the same analysis. The country exported 38% of the world’s industrial robots in 2024, shipping more than 160,000 units worth approximately $12.5 billion to buyers in China, the United States and Germany.
In the first quarter of 2025, robot orders reached an all-time high of 324.5 billion yen, up 14.2% from the previous year. Japan’s auto industry saw the installation of nearly 13,000 industrial robots in 2024, the highest annual total since 2020.
Robots give Tokyo a head start
Japan’s financial investment makes the country part of a physical AI market that Acumen Research estimates will be worth $5 billion in 2025 and is expected to grow to $82.8 billion in 2034 with an estimated growth rate of 32.8%. Japan’s share in this market is expected to grow from $307.3 million in 2025 to $6.8 billion in 2035.
“ChatGPT’s moment for bots is now,” NVIDIA CEO Jensen Huang said at CES 2026, Acumen reported. According to IDC data, global shipments of humanoid robots are expected to exceed 50,000 units in 2026, up 178% from 2025.
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