Two working groups hold inaugural meetings: Public-private investment across 17 strategic fields — Government launches full-scale review with roadmap expected this spring

Acting on instructions from Prime Minister Sanae Takaichi at the Council for Japan's Growth Strategy, full-scale deliberations have begun on public-private investment roadmaps covering 17 strategic fields. The AI and Semiconductor Working Group and the Fusion Energy Working Group (WGs) held their inaugural meetings in quick succession. The WGs will narrow down target areas and key issues, then compile public-private investment roadmaps with clearly defined goals, pathways, and policy measures by April or May, to be reflected in the FY2027 budget. Policies linked to Japan's strategies for success will receive comprehensive support, including multi-year strategic investment and regulatory reform.

Securing a manufacturing base for advanced next-generation semiconductors

AI and semiconductors have become critically important foundational technologies directly tied to industrial competitiveness and national security, and countries around the world are intensifying both the public and private sector efforts. At the end of last year, the Japanese government formulated its first AI Basic Plan and is pursuing initiatives on both the utilization and development of AI in order to build trustworthy AI.

Minister of State for Artificial Intelligence Strategy Kimi Onoda stated: "To achieve Japan's revival, I believe Japan has two paths for success in AI. The first is to advance the social implementation of domain-specific AI that leverages expertise and data in particular fields-AI that solves on-the-ground challenges in agriculture, forestry and fisheries, manufacturing, healthcare, logistics, defense, finance, public administration, science, and more-and to connect that to solving problems around the world. The second is Physical AI, where AI perceives and reasons about the real world through robots and machines, and then acts physically. We want to combine this with Japan's strengths in manufacturing and other sectors to create a strategy for success. The government intends to invest over 1 trillion yen in the near future to advance AI-related initiatives. We expect this to draw in private investment as well. To improve predictability, we want to formulate a strategy for driving bold public-private investment in AI and semiconductors."

The Ministry of Economy, Trade and Industry (METI) has formulated the AI and Semiconductor Industry Strengthening Framework, which aims to provide over 10 trillion yen in public support by 2030 and achieve over 50 trillion yen in combined public-private investment. Efforts are underway to secure a manufacturing base for advanced next-generation semiconductors, conduct research and development, and develop AI foundation models, among other initiatives.

Parliamentary Vice-Minister of Economy, Trade and Industry Toshiyuki Ochi stated: "In light of the rapidly changing landscape surrounding the AI and semiconductor industries, we are called upon to identify the key issues and challenges facing Japan's AI and semiconductor industries and to formulate a public-private investment roadmap aimed at expanding strategic investment. In addition to ongoing efforts to secure advanced next-generation semiconductor manufacturing capacity, it is important to strengthen semiconductor policy in tandem with AI policy, focusing on enhancing the semiconductor design and development capabilities required for Physical AI as well as strengthening supply chains."

The AI and Semiconductor WG outlined the following directions: advancing the development and social implementation of Physical AI-which integrates images, audio, video, and various sensors to understand and act in the real world-and Vertical AI, which solves problems within specialized domains; accelerating development of logic, memory, and legacy semiconductors by working backwards from the functional requirements of the physical intelligent systems needed for robots and other devices equipped with Physical AI; and strengthening semiconductor design support.

Vigorously advancing component technology development over five years

Meanwhile, the Fusion Energy WG presented a draft public-private investment roadmap, though it does not yet include specific numerical targets such as investment amounts.

According to estimates by the IAEA, the long-term boost to global GDP from fusion energy could reach a maximum of over approximately 700 trillion yen. The roadmap draft includes a target for Japanese companies to obtain orders for roughly X percent (figure TBD) of power plants in that market, as well as to capture a 100% share in several major components of fusion devices.

Although a global development race is underway, no country has yet achieved power generation from fusion. Even so, Japan holds key technologies that act as chokepoints even in the most ambitious foreign programs, and Japan's technological capabilities are at the world's highest level. Building on this foundation, Japan aims to further accelerate technology development and demonstration, and to be the first in the world to demonstrate a competitive power generation system. This will allow Japan to capture a global market share and connect that achievement to economic growth. To this end, the country will nurture companies capable of designing, building, and operating competitive power plants, and will build a robust supply chain to support them.

The next approximately five years will be structured as a research and development phase aimed at establishing component technologies, with the government taking a central role in driving R&D. Diverse approaches, including tokamak, helical, and laser methods, have been proposed. The government will vigorously advance the development of component technologies common to all, while broadly supporting technology development for power generation systems with high feasibility. Targeting a timeframe of a few years from now, a power generation system will be selected based on the progress of technological development in each approach, the state of organizational readiness (including in the private sector), and trends overseas, and R&D investment will then be concentrated on that system.

The construction of a demonstration reactor for power generation is expected to take about 10 years, and the goal is to achieve power generation demonstration in the 2030s. The entity responsible for implementing the power generation demonstration project will be decided in 2029, three years from now. The amount of public-private investment over the next five years, the public-private investment needed for the power generation demonstration, and the private investment required for social implementation beyond that will all be topics of consideration going forward.