Japan's Tech Titans Just Teamed Up to Build a Trillion-Parameter AI—And It's Not Here to Chat

In brief

• SoftBank, NEC, Honda, and Sony each took 10%+ in a new AI development company, joined by major banks and steelmakers.
• The company’s trillion-parameter model targets Physical AI—robots, autonomous vehicles, and industrial machines—not conversational chatbots.
• Japan’s government NEDO agency has earmarked ¥1 trillion (~$6.7B) over five years, with Japanese data kept domestic and off foreign cloud infrastructure.

Japan isn’t interested in building the next ChatGPT. On Sunday, SoftBank, NEC, Honda, and Sony Group jointly formed a new company with one goal: build a trillion-parameter AI model that runs machines, not conversations. The move is a direct bet on what the community refers to as “Physical AI”: the idea that the next frontier isn’t language models that write your emails, but AI systems that control a robot arm, drive a car, or run a factory floor. Japan, with its deep industrial base and decades of robotics heritage, thinks it has a natural edge that Silicon Valley and Beijing can’t easily replicate.

Based on reports, SoftBank and NEC will lead the actual AI development. Honda will deploy the results in autonomous driving. Sony brings robotics and gaming hardware to the table. Preferred Networks, a respected Tokyo-based AI developer, is also involved. The company, which roughly translates in English to “Japan AI Foundation Model Development,” plans to hire around 100 AI engineers, with a SoftBank executive named as president. Banks and steelmakers showed up too. Nippon Steel, Kobe Steel, MUFG Bank, Sumitomo Mitsui Banking, and Mizuho Bank are all listed as investors, so this is much bigger than a simple tech startup.  The government money will flow through NEDO, a national R&D agency that has earmarked roughly ¥1 trillion—about $6.28 billion—in AI support over five years starting fiscal 2026. Japan AI Foundation Model Development is expected to apply and is considered a near-certain pick.

Japan has spent years sending its data to U.S. cloud infrastructure and paying for the privilege—the so-called “digital deficit” that has drained capital and left Japanese industry dependent on foreign tech stacks. The new company wants AI trained on Japanese data, staying in Japan, not feeding OpenAI or Google’s pipelines. That makes for a pointed contrast with SoftBank’s own global moves. The firm led OpenAI’s $40 billion funding round in 2025, and now it’s on the other side of the table—anchoring a domestic model meant to chart a path independent of the same American AI ecosystem it’s been bankrolling. Physical AI is heating up globally and big companies are starting to pay attention. Tesla is building its own robots, OpenAI is also supporting AI/robotics startups and China’s own political plans include massive investments in this area. Earlier this year, leading stablecoin company Tether invested in humanoid robotics startup Generative Bionics, which markets its machines as “Physical AI” systems designed to fuse robotics with intelligence that perceives and acts in the world—not just responds to prompts. The target for practical Physical AI applications is 2030, according to local reports. NEDO began accepting proposals for the funding program in late March—meaning the clock is already running.