Japan Tech – Thematic Research

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Japan is found to be in the top three globally in 5G deployment and is the clear global leader in robotics. It has developed the world’s fastest supercomputers on which to develop and deploy downstream Society 5.0 AI applications in robotics, automation, healthcare, and XR. It has work to do to secure chip supplies.

What are the main trends of the Japanese technology?

The main trends in and around Japanese technology are classified into three categories: technology trends, macroeconomic trends, and regulatory trends. Japan is the global upstream chip superpower. It is the indispensable supplier to the industry’s engine room. It controls the key global markets in specialist materials, chemicals, and equipment such as etchers, photoresists, molders, packaging technology, and ultra-thin wires via companies such as Shin Etsu, Tokyo Electron, Ibiden, Asahi Kasei, and Towa Group. Downstream, Fujitsu stands out, having developed (with the Riken Institute) the first Arm-based processors for supercomputers, including the world’s fastest supercomputer, Japan’s own Fugaku. It is also pioneering the use of carbon nanotubes for super-fast hybrid memories.

The automotive and robotics industries are the main spurs behind Japan Inc’s drive to develop and deploy AI to make ‘things’ increasingly autonomous and context-aware. According to the government website, Japan must use “technology to reinvent society” and become an exportable supersmart society in the process. According to a recent poll of leading global companies by ESI Thought Lab, Japan leads the world in the number of active projects to develop and deploy AI. Japan’s relatively low degree of digitization and lack of a startup ecosystem in any way comparable to Silicon Valley, Shenzhen, Berlin, or Tel Aviv means that it is unlikely to make a mark in AI for eCommerce and the consumer angled mobile internet. It is focused instead on smartening up its automotive and automation sectors, which will be the drivers and shapers of the economy and help it pay for the energy, raw materials, and food that it needs to import.

Japan is also found to be the clear leader in robotics, with more than 50% share of the global market in industrial robots, over 30% of the total automation market. With Yaskawa, FANUC, and Kawasaki leading the parade, seven of the world’s top 10 robot manufacturers are Japanese. It also has a virtual monopoly in upstream robot component markets such as reduction gears (over 90% market share) and AC servo-electric motors (80%) via specialist suppliers like Nabtesco, Keyence, and Nippon Ceramic.

Japan has entered a fourth decade of low growth, if not stagnation, due to its demographic headwinds and increasing competition from a more automated China, thanks primarily to Japanese-supplied robotics. Japan cannot rely on a marked growth in consumer spending to spur a new era of 2%-plus GDP growth. As the government acknowledges, the job will have to be done by sustained productivity growth via further wholesale automation and innovation, digitalization, and creating a less risk-averse, more diverse corporate culture. The government says that Japan aims to become the first country to achieve economic growth with a shrinking population by becoming “a super-aging, supersmart society.”

Apart from a fraught relationship with South Korea, Japan is in a geopolitically strong position in trade terms. It is a key US Pacific ally, forming part of the Quad group alongside the US, India, Australia, and Japan. China relies on it for robots and downstream robot parts as well as for specialist industrial chemicals and components for deep ultraviolet (DUV) and photolithographic semiconductor production. The US and Europe also rely on it these chemicals and this specialist equipment. Despite sporting one of the world’s fastest internets and with 4G connectivity linking an estimated 90% of households, over 80% of retail transactions in Japan are still in cash. The country is definitely behind the curve in digitizing fintech and eCommerce. This reflects the low priority that many consumer-related and financial businesses in Japan have given to software development due in part to the high embedded cultural status given to making real physical things. Any change will be slow and incremental.

At the June 2021 G7 summit, Japan announced no change to its Basic Long-Term Energy Plan of 56% dependence on fossil fuels in 2030, 22% to 24% on renewables, and 20% to-22% on nuclear. However, the government has said that it would decommission some older coal-fired plants with less than 43% efficiency and be careful to only finance foreign coal projects where long-term decarbonization measures are in place.

What are the future industries of Japan?

The Japanese companies which may feature prominently globally and will almost certainly do domestically over the next decade, in the context of these tech industries:

Hardware: It includes industrial robots, precision parts, medical robots, consumer robots, electric vehicles, autonomous vehicles, high-performance computing, and semiconductors. Japan’s big three industrial robotics companies – FANUC, Kawasaki, and Yaskawa – dominate the global industrial robot scene accounting for over 40% of product deliveries, according to the IFR’s latest figures. But ABB and KUKA (owned by Chinese appliance giant Midea) lead over the Japanese suppliers in developing the most advanced, cloud-orchestrated systems, although working with Rockwell Automation and Cisco, among others, has helped FANUC close the gap on the Europeans. 

Software: It includes video games, extended reality, and artificial intelligence. Japan is the third-largest gaming market by revenue, preceded by China and the US. Traditionally a global epicenter of video games, Japan is home to leading console makers like Nintendo and Sony. The Nintendo Switch proved to be the most popular console in the country in 2020, outpacing Sony’s PlayStation consoles by sales. Nintendo sold over 5 million Switch units (including the Lite edition) in Japan in 2020, while Sony reportedly sold less than one million units of its PlayStation consoles (PS4 and PS5 combined). In 2021, the ongoing chip shortage is hitting the production of consoles; both Nintendo and Sony have indicated a potential shortage of devices. As a result, the companies will likely limit selling consoles in Japan to meet overseas demand in 2021.

Services: It includes Society 5.0, smart cities, and 5G services. The centerpiece of Japan’s technological vision for the next decade is the idea of a Society 5.0, in which social issues are addressed by merging cyber and physical space. By using AI to analyze the vast swathes of data generated by IoT devices, Japan hopes to develop a data-driven society where improving its citizens’ quality of life is the main reason for technological innovation. Those familiar with the idea of Industry 4.0 – where factories are improved on these principles – will recognize the aims of Society 5.0.

Which are the key players in the Japanese technology sector?

The key players in the Japanese technology sector are FANUC, Fujitsu, Panasonic, Sony, Toyota, Paidy and Preferred Networks are the companies mentioned in the report.

Japan Technologies sector, by key players

Japan Technologies sector, by key players

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Market report scope

Key Players FANUC, Fujitsu, Panasonic, Sony, Toyota, Paidy and Preferred Networks


This report looks at the state of Japan’s technology sector as well as its tech-driven automobile sector. It contains an analysis of Japan’s industries of the future, including industrial robots, medical robots, consumer robots, precision parts, electric and autonomous vehicles, high-performance computing, semiconductors, video games, extended reality, artificial intelligence, Society 5.0, smart cities, and 5G. It also looks at the technology, macroeconomic, and regulatory trends currently impacting Japan’s tech sector, and analyzes merger and acquisition (M&A) activity.

Key Highlights

We see little sign that Japan Inc – based on the collaborative keiretsu culture among the big conglomerates – will break out into a growth economy following the relative failure of reformist Abenomics. It remains a rigidly conservative, risk-averse, hierarchical society, albeit armed with considerable technological prowess.

However, given this technological prowess, by 2030 Japan will have developed and deployed the technology stack needed to enable a supersmart society, or what it calls Society 5.0. This stack will comprise 5G connectivity, sensors, robotics, artificial intelligence (AI), high-performance computing, and extended reality (XR) co-evolving to yield cyber-physical integration in a pervasive, interactive spatial web.

The onus for delivering Society 5.0 will lie with Japan’s leading research institutes, the National Institute of Advanced Industrial Science and Technology (AIST) and Riken, working closely with its leading technology platform companies, including Toyota, Honda, Fujitsu, NEC, Sony, Rakuten, Panasonic, and FANUC. Support will come from scores of specialist, world-beating upstream hardware and software component suppliers such as Tokyo Electron, Nabtesco, and Keyence.

Reasons to Buy

  • Japan is in the top three globally in 5G deployment and is the clear global leader in robotics. It has developed the world’s fastest supercomputers on which to develop and deploy downstream AI applications in robotics, automation, healthcare, and extended reality.
  • This report offers invaluable insight into this fascinating and potentially lucrative market, including details of the leading companies across Japan’s hardware, software, and services segments.

Activision Blizzard
Alphabet (Waymo)
Amazon (Zoox)
Analog Devices
Aptiv (NuTonomy)
Argo AI
Bandai Namco
China Mobile
China Unicom
Ekso Bionics
Electronic Arts
Epic Games
Focal Meditech
Franka Emika
GM (Cruise)
GungHo Online
Hahn Group
Harmonic Drive
HPE (Cray)
Inspur Electronic
Intuitive Surigcal
Johnson & Johnson
Kawasaki Heavy
LG Chem
LG Electronics
Magic Leap
Midea (KUKA)
Mitsubishi Electric
Nachi Fujikoshi
Neato Robotics
Nippon Ceramic
Nissan Renault
NTT Docomo
Preferred Networks
Robert Bosch
Rockwell Automation
Roper Technologies
Samsung Electronics
Sega Sammy
Seiko Epson
SK Hynix
SK Telecom
Square Enix
Stellantis (Comau)
Take-Two Interactive
TE Connectivity
Teradyne (Universal Robots)
Texas Instruments
Tokyo Electron
Trend Micro
Unity Technologies
Z Holdings
Z Holdings (Line)
Zimmer Biomet

Table of Contents

Executive summary



Japan and the industries of the future


Mergers and acquisitions



Japan tech sector scorecard


Further reading

Thematic methodology

Frequently asked questions

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