Fortune Business Insights projects Japan’s AI market to rise from US$15.6 billion in 2025 to US$123 billion in 2032
That projection sits at the centre of a case made this week for deepening Australia–Japan cooperation in artificial intelligence. The immediate prompt was the visit by Japan’s prime minister, Sanae Takaichi, to Australia and the signing of an economic security agreement with Prime Minister Anthony Albanese that pledged to “look for opportunities to further promote concrete cooperation” on technologies including AI.
Takaichi‑Albanese agreement: a political opening for industrial cooperation
The economic security agreement signed during the visit explicitly included AI among the technologies for enhanced collaboration, presenting Canberra with a politically sanctioned pathway to pursue closer ties. The source argues that Australia should “lean into this opportunity as far as Japan is willing to go.” That prescription frames the bilateral moment as both strategic and practical: Tokyo has signalled urgency through institutional steps — including an AI Strategic Headquarters that reports directly to the prime minister’s office — while Canberra has the natural resources and hosting capacity that Japan lacks.
Japan’s industrial heft: companies, frontier models and Rapidus
Tokyo’s strategy is described as “very pro-development” and backed by major national firms. The source lists Sony, NEC, Softbank and Honda as participants in a consortium to develop a “frontier model that can be used to interact with the real world — distinct from a chatbot” and to integrate with Japan’s strengths in robotics and advanced manufacturing. Japan is also investing heavily in semiconductors through a state-backed flagship in Rapidus Corporation, with investment from Toyota, Sony, Softbank and Fujitsu.
Those private‑public moves dovetail with Japan championing “human‑centred” AI principles — a governance posture the source says aligns well with many other countries and could allow Tokyo to use its industrial investments to influence international norms.
Sovereign capability, chips and supply‑chain cautions
The source poses a clear risk picture: AI is “dominated to a dangerous degree” by two tech superpowers — the United States and China — and that concentration threatens other countries’ access to frontier capabilities. It cites specific frontier models by name: Anthropic’s Claude, OpenAI’s GPT‑5 and China’s DeepSeek. Beijing’s approach is characterised in the source as seeking to “dominate AI and all the surrounding technologies” and to free itself of dependencies while making others dependent on it; the article recalls that China has previously restricted access to critical materials and technologies to pressure other states.
On the US side, the source argues that Washington will “remain a vital partner” but warns of unpredictability, citing US President Donald Trump’s use of tariffs and withdrawal of security cooperation as coercive measures and noting the US approval, “at least in principle,” of the sale of Nvidia’s advanced chips to China for training AI models. The article concludes that “Australia is safer if it develops greater sovereign capability,” while accepting that sovereignty need not mean autarky.
Practical mechanisms for Australia–Japan AI cooperation
The source maps concrete avenues for cooperation: technology transfer and research collaboration; incentives for two‑way investment; favourable visa arrangements for AI workers to enable skills mobility; R&D tax credits for joint AI projects; and purchase guarantees aligning industrial outputs. It gives an example: Australia could guarantee to buy a portion of Japan’s semiconductor output, while Japan could pledge to buy computing power from Australian data centres.
The piece also positions AUKUS Pillar Two — the defence‑technology pillar of the trilateral partnership — as a useful model and notes Japan’s interest in joining Pillar Two, suggesting that Australia–Japan AI cooperation “could sit alongside AUKUS and gradually integrate with it where beneficial.”
What this means for technologists, policymakers, and procurement leaders
- Technologists and security teams: Watch for closer Japan–Australia R&D channels and consortium projects (Sony, NEC, Softbank, Honda) building models aimed at interacting with the physical world — work that will likely intersect with robotics and manufacturing capabilities.
- Policymakers and regulators: Expect pressure to craft incentives for bilateral investment, visa arrangements for AI talent, and procurement guarantees — all to secure supply chains for semiconductors and compute while aligning with “human‑centred” AI principles.
- Procurement leaders and enterprises: Opportunities may arise to source semiconductors and hosted compute under bilateral guarantees; industries such as mining, financial services and healthcare in Australia are signalled as high‑value adopters, using Australia’s minerals, land and renewable energy to host data centres.
The article closes on a strategic imperative: pairing Australia’s natural advantages — critical minerals, hosting capacity and sectoral adoption potential — with Japan’s industrial scale and governance posture could expand Canberra’s options in a world where frontier AI capability is concentrated. The central political choice it leaves framed is straightforward and quoted from the source: will the Australian government “lean into this opportunity as far as Japan is willing to go”?
https://www.aspistrategist.org.au/japan-and-australia-are-perfect-partners-in-the-world-of-ai/
