News On Japan

Decoding U.S. 'Black Ship' Data Centers in Japan

TOKYO - Major American IT companies like Microsoft and Oracle have announced substantial investments totalling 4 trillion yen ($26 billion) in data centers in Japan, sparking concerns about digital sovereignty and AI development.

Decoding U.S. 'Black Ship' Data Centers in Japan

Initiatives such as 'Digital Government' promoted by Japan's Digital Agency are believed to play a role.

With Japanese companies also joining the fray, a future where data centers' power consumption exceeds current production is anticipated. Will this development impede AI advancement in Japan?

Furthermore, under American cloud laws, the reach of criminal investigation extends even to U.S. companies' data centers located within Japan, prompting concerns about the safeguarding of Japanese data sovereignty.

Professor Ichiro Sato from the National Institute of Informatics, offering a comprehensive perspective.

The facilities in the video are data centers for installing servers and networking equipment. Major U.S. IT companies are rapidly establishing these data centers in Japan. Oracle, Amazon Web Services, and Microsoft, familiar names in Japan, are among the giant U.S. IT firms that have announced plans this year to build data centers in Japan. The total investment amounts to a staggering four trillion yen.

Professor Sato, why are these American companies now so intent on establishing data centers in Japan?

There are several reasons, but one is that these data centers are intended for cloud services. Currently, there's a move in Japan to shift administrative systems of central government agencies and local governments to the cloud—a new trend. Because these are government systems, there's a preference to have them located within Japan. Private companies feel the same way. Even if using American clouds, if the data centers are in Japan, Japanese law applies more broadly, so there's a growing demand to keep such facilities in Japan.

The graph here predicts the market size of data centers by country; America and China dominate while Japan appears quite small in comparison. However, by 2028, it's expected to increase by 1.4 times from 2023, reaching a market size of 24 billion dollars, or 3.7 trillion yen.

Professor Sato, do you think there's an oversupply of data centers in Japan, or how do you see the demand?

Globally, data is expected to double every three years, increasing by about 1.3 times annually. Not all this data will be processed, but as data increases, so does the need for computation, and much of this will be done in data centers, so the demand for data centers is expected to rise.

There was a mention earlier about government cloud. How do data centers differ from clouds?

Clouds are realized through multiple data centers. Especially American clouds are automated so that one administrator can manage over ten thousand servers, which is commonplace. In Japan, there's hardly any service that coordinates data centers, and in Japanese data centers, it's more about companies placing and running their own servers, so automation is minimal.

In this context, Japanese companies are also planning to build new data centers. Daiwa House is planning a large-scale facility equipped with power supplies and racks. Sakura Internet can support government and local government cloud services and will eventually support generative AI. SoftBank plans to use data centers for its own AI development and cloud services.

With such moves by Japanese companies to build data centers, how do you view this?

For example, Daiwa House would be quite literally about providing a place for companies to operate their servers. Sakura Internet runs its servers but rents them out to companies. SoftBank is likely focusing on its own use.

Each has its intended purpose, but the fact that American companies are building data centers in Japan indicates significant demand. Is it difficult for Japanese companies to meet this demand?

As Japan digitalizes, the use of servers will increase whether through clouds or local data centers, boosting server demand. This increase might lead to competition between Japanese data centers and those overseas. It's likely to happen, as owning servers or renting cloud services has significant cost implications that vary with usage. Generally, using the same service naturally leads to competition.

So, the situation is not as simple as being universally welcomed. While there are benefits to having data centers in Japan, challenges remain.

Source: テレ東BIZ

News On Japan
POPULAR NEWS

A magnitude 5.7 earthquake struck central Japan early on November 8th, registering an upper 5 on Japan's seismic intensity scale in Aichi Prefecture and injuring at least 21 people, while damaging buildings and disrupting Shinkansen and conventional railway services across the region.

The Tokaido Shinkansen resumed normal-speed operations across its entire route at 8:57 a.m. on November 8th after a magnitude 5.7 earthquake disrupted rail services across central Japan, with JR Central reporting delays to 29 bullet trains affecting approximately 17,000 passengers, while Meitetsu restored services across its entire network by 9:15 a.m. following widespread morning suspensions.

Russian President Vladimir Putin has signed a decree placing the Russian operations of Japan Tobacco (JT) under the temporary management of a local company, effectively stripping the Japanese tobacco giant of control over its business in the country and prompting a formal protest from Tokyo demanding that the measure be immediately withdrawn.

Bears preparing for winter hibernation may be able to determine when astringent persimmons have lost their bitterness and become suitable to eat, according to research by the University of Hyogo, which suggests that prioritizing the removal of sweet persimmon trees could help prevent bears from entering residential areas.

Japan's government is facing growing pressure from opposition lawmakers to clarify who will qualify for a new financial support program and how much they will receive, as deliberations on legislation to reduce the consumption tax on food and introduce payments for low- and middle-income earners enter their final stages in the House of Representatives.

MEDIA CHANNELS
         

MORE Business NEWS

Nissan Motor is stepping up efforts to revive its struggling business through new vehicle development, sweeping cost reductions and an overhaul of its sales strategy, as President and CEO Ivan Espinosa seeks to restore the Japanese automaker's competitiveness following consecutive years of massive losses.

Japan's benchmark Nikkei 225 index plunged 3,643 points, or 5.96%, to close at 57,435 on Friday, November 6, 2026, marking its fifth consecutive daily decline and one of the largest point losses in its history, as a global selloff in technology stocks spread across the Tokyo market and raised concerns about the sustainability of artificial intelligence investment and corporate valuations.

Municipalities across Japan are raising the cost of designated garbage bags as waste disposal expenses increase, with one town in Hokkaido proposing a 4.5-fold price hike from 385 yen to 1,735 yen for a pack of 10 bags, while growing pressure on incineration facilities is prompting debate over whether more cities should introduce paid household garbage collection.

Japan's inflation-adjusted wages rose 2.2% in September from a year earlier, marking the ninth consecutive month of growth and the longest sustained increase in about a decade, as slower price increases helped boost workers' purchasing power.

Tokyo stocks suffered a sharp sell-off on November 6 as growing concerns over a slowdown in artificial intelligence investment sent the Nikkei 225 plunging more than 4,300 points at one stage, pushing the benchmark below the psychologically important 60,000 level following a sweeping Democratic victory in the U.S. midterm elections.

Sony Group reported a record net profit of 791.7 billion yen for the six months from April to September 2026, up 38% from a year earlier, driven by strong performance in its film business, including the worldwide success of a new installment in the Spider-Man franchise.

Tokyo's Nikkei 225 Stock Average closed at 61,077.90 on Thursday, November 5, falling 1,110.73 points, or 1.79%, from the previous session in its fourth consecutive daily decline, as heavy selling in semiconductor and artificial intelligence-related shares dragged the benchmark to its lowest closing level in about five and a half months, despite gains across much of the broader market.

Japan's Nikkei 225 Stock Average closed at 62,188.63 on Wednesday, November 4, 2026, falling 893.23 points, or 1.42%, from the previous trading session as heavy selling in semiconductor and artificial intelligence-related stocks swept through Tokyo markets following the U.S. midterm elections, although a strong afternoon recovery helped the benchmark recover much of its earlier losses.