US pressure: Taiwan's high-stakes chips
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Japan Times
15 minutes ago
- Japan Times
Japan leans into homegrown AI amid rising competition
Against a backdrop of rising international competition, Japan is taking a top-down approach to artificial intelligence development and seeking to capitalize on a rapidly changing, tech-centered global economy. McKinsey's 2025 Technology Trends Outlook, published Wednesday, says that the use of 'sovereign AI' is a trend gaining significant global traction, including in Japan. 'Countries and corporations have doubled down on sovereign infrastructure, localized chip fabrication, and funding technology initiatives such as quantum labs. This push for self-sufficiency isn't just about security; it's about reducing exposure to geopolitical risk and owning the next wave of value creation,' the report said. Sovereign AI — essentially a nation's ability to produce AI tools using domestic data, infrastructure and workforces — is increasingly a priority for countries seeking to utilize AI to respond to important domestic issues, while protecting against geopolitical vulnerabilities. Japan, which has poured trillions of yen into the domestic development of AI, chips and infrastructure, is among the countries aiming to develop localized models to target national priorities. The country has already deployed AI to carry out earthquake risk assessments and for emergency communications, and officials are also hopeful that AI may help tackle Japan's chronic labor shortage and help improve business competitiveness. In February 2024, the Ministry of Economy, Trade and Industry and the ministry-affiliated New Energy and Industrial Technology Development Organization launched the Generative AI Accelerator Challenge, with the aim of raising the platform model development capability in Japan through the provision of various types of support. In the same month, the AI Safety Institute was launched to monitor and develop globally informed standards. But despite the top-down efforts, the adoption of AI in Japan remains less pronounced than in other global markets. Just 26.7% of people in the country had used generative AI in fiscal 2024, which ended in March, compared with China's 81.2% and the U.S.'s 68.8%, according to a recently published government white paper on information and communications. The same survey showed that 49.7% of Japanese companies have plans to use generative AI, while in the U.S. and China, more than 80% of firms plan to adopt it in their operations. Despite Japan having a more cautious approach than other markets, large players such as SoftBank and Fujitsu have thrown their weight behind the rapidly developing technology. The McKinsey report notes that, despite the rapid growth of generative AI globally, organizations remain some way off from fully utilizing its corporate potential. 'The big gap between potential and progress can be explained by the time required for organizations to adapt, develop complementary innovations, and reskill their workforces. Therefore, the true economic benefits of gen AI may become visible only after substantial organizational and structural changes have taken place,' the report said.
Japan Times
2 hours ago
- Japan Times
As Japan grays, government looks to aid public-private cooperation in nursing care
The industry ministry is working to promote cooperation between private firms and local governments to ensure a stable supply of nursing care and elderly support services as demand increases in the graying country. The initiative is aimed at making it easier for companies to develop services in the fields by helping them understand demand in each region. In fiscal 2025, subsidies of up to ¥6 million ($40,800) will be provided to companies that work to develop services tailored to each region, such as by conducting surveys to learn about specific needs in cooperation with local governments. The ministry hopes to create model cases of public-private cooperation. The selected companies will be announced in mid-August. After their projects are completed, the companies will be asked to submit performance reports. As the population ages, the proportion of people who provide nursing care while working is on the rise, and demand for services not covered by insurance, such as helping elderly people with shopping, keeping an eye on them and accompanying them to hospital, is also expected to grow. Meanwhile, private-sector companies are often cautious about entering the market out of concern for their ability to figure out the needs for nursing care and elderly support. After obtaining information such as the number of elderly people and resident requests from local governments, the ministry aims to promote the development of sustainable services reflecting the needs of each region.
Japan Times
3 hours ago
- Japan Times
Japan carmakers put squeeze on households with higher loan rates
Japan's automakers have begun hiking loan rates as a historic central bank pivot to unwind three decades of ultraloose monetary policy trickles down to consumers, raising household credit costs. More than a year after the Bank of Japan's first interest rate increase in 17 years, the volatile march higher in superlong bonds is raising the cost of servicing loans, including car repayments — making the auto sector one of the first key pain points as households look to tighten their belts. Japan's biggest carmakers are already raising rates. Honda's annual interest rate has been at 5.5% since April, according to the company's website, a bump from the 4.9% it offered in June 2024. Mazda said it currently offers a 3.9% annual interest rate for residual credit loans, an increase from last year's 3.4%, through its joint venture with Toyota Finance. Meanwhile, Subaru said its 3.9% residual loan rate is unchanged from last year. Loans, credit and leases accounted for about 42% of all new vehicle purchases in the country in fiscal 2023, according to the Japan Automobile Manufacturers Association. "The nation is entering an era of normalized interest rates for the first time since these financing tools became common use,' said Hikaru Todoroki, principle auto consultant for KPMG. While measures like extending repayment periods may help contend with rising rates, there's a risk the auto industry turns to discounting — creating price volatility that would ultimately hurt both companies and consumers, he said. Japan's long battle with deflation was synonymous with incredibly low interest rates that, alongside repayment terms that focus on the residual value of a car, made luxury models relatively attainable. It's not unusual for a middle class family to drive a Toyota Alphard, a large van that sells for as much as ¥10 million (about $67,000). But growing pressure on household expenditure may reshape what consumers buy. The ripple effect of higher loan repayments may be a drop in used-car prices and a surge in demand for more budget-friendly new-car options, according to Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. Tosai Group, which operates a network of new and used car dealerships across Japan's Kanto region, has offered loans with a 1.9% interest rate for several years. Billboards touting low rates line the street in Misato, Saitama Prefecture, where the company's flagship store is located. But it's unlikely to be able to offer those deals over the medium to long term, which will weigh on demand, according to Yoshihiro Baba, a managing director at the company. "We might have to take those down,' he said, looking at the advertisements. A drop in demand would deal a major blow to an industry already hit hard by U.S. President Donald Trump's tariffs on cars and parts. Japan's major carmakers have warned the duties will hammer their bottom lines, but the impact also risks derailing Japan's economic recovery given the importance of the sector. The BOJ, meanwhile, is due to meet on July 31. While policymakers are expected to keep the benchmark rate unchanged, persistently high inflation is likely to keep the central bank on the path toward further interest rate increases later this year. Low interest car loans have allowed banks and automobile manufacturers, along with the financiers and dealerships they work with, to lend money to more customers, said Yuuki Fukumoto, senior financial researcher at NLI Research Institute. "Interest rates are surely going to keep rising.'
