Microsoft Corp has unveiled a four-year, US$10 billion investment package for Japan, a major pillar of its Asia-wide artificial intelligence (AI) push.
The early OpenAI backer is to develop cloud and AI infrastructure alongside Sakura Internet Inc and telecom Softbank Corp, with the two Japanese entities supplying graphics processing units and other computing resources.
Sakura Internet’s stock yesterday jumped 20 percent on the news, while shares of Softbank, the telecom arm of investment group Softbank Group Corp, rose 1.6 percent.
Photo: Bloomberg
As part of the package, Microsoft, whose Copilot has struggled to keep pace with OpenAI’s ChatGPT and Google’s Gemini, is to invest in cybersecurity partnerships and train 1 million AI engineers through 2029, but the biggest outlay would go to expanding the company’s cloud computing capacity and building new data centers, Microsoft president Brad Smith said in an interview with Bloomberg and Japanese broadcaster TBS.
“We don’t build these things simply on the basis of a hope and a prayer. We build them on the basis of clear demand and demand signal,” he said, following a meeting with Japanese Prime Minister Sanae Takaichi.
Acting too slowly would either mean losing market share to competitors or holding Japan behind, he said.
“We obviously have to keep our feet on the ground even as we move fast, and we do that,” he said.
The Redmond, Washington-based company is battling Amazon.com Inc and Alphabet Inc for dominance in Japan, which is seeking to build a robust AI ecosystem to catch up with the US and China.
Microsoft’s commitment in Japan — which it says would help keep data processing within the country’s borders — follows similar announcements earlier this week in Singapore and Thailand, as well as a pledge in 2024 to spend about US$2.9 billion in Japan over two years.
However, US hyperscalers’ plans to spend about US$650 billion this year to build power-guzzling data centers are coming up against global power constraints, as the war in the Middle East enters its second month. Resource-poor Japan relies on the Middle East for more than 90 percent of its oil and is already turning to less-efficient coal-fired power plants to make sure it can meet existing energy needs.
“It’s an uncertain world,” 67-year-old Smith said of the prospect of oil shortages. “We’ll manage through it, but it’s one of the reasons we build such diversity in our supply chain wherever we can.”
The Japanese government is earmarking about ￥1.23 (US$7.7 billion) to support cutting-edge chips and AI development this fiscal year. It is seeking to use the country’s leadership in industrial robotics to win a more than 30 percent global market share in so-called physical AI by 2040.
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