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Japanese Companies Step Up AI Security, Investment Products and Business Restructuring

TOKYO - Japanese companies announced new cybersecurity services, investment products and technology initiatives on July 14, while earnings releases highlighted sharply different conditions across the housing and food-import sectors.

SoftBank Corp. said it will expand the planned rollout of its artificial intelligence-powered cybersecurity service to around 3,000 major Japanese companies, as businesses face growing pressure to identify and repair software vulnerabilities more quickly.

The service, known as "Patching as a Service," was developed with SB OAI Japan, the joint venture established by SoftBank and OpenAI. It covers vulnerability assessments, remediation planning and support for applying security patches.

SoftBank said it will establish an Enterprise AI Cyber Defense Office on July 16 and deploy a team of approximately 1,000 personnel with SB OAI Japan to provide the patching service and related consulting. The company tested the system on its own internal infrastructure before expanding it to customers.

The announcement is part of SoftBank's broader effort to turn generative AI technology into services for large Japanese companies rather than limiting its use to workplace assistants and document creation. Cybersecurity is expected to become a major commercial application because many companies struggle to assess vulnerabilities and apply patches across complex internal systems.

Hitachi Solutions separately announced that it had conducted a technology verification project involving post-quantum cryptography, which is designed to protect data against future attacks using quantum computers.

The company said the initiative was intended to prepare systems for an era in which existing encryption methods could become vulnerable to the processing power of quantum technology. Although commercially useful quantum computers capable of breaking widely used encryption are not yet available, companies and governments are beginning preparations because replacing encryption across major systems could take years.

Nomura Asset Management launched a new actively managed exchange-traded fund on the Tokyo Stock Exchange targeting Japanese companies connected to government-designated growth industries.

The NEXT FUNDS Japan Equity Policy Focus ETF began trading under securities code 605A. The fund will select companies involved in priority policy areas by analyzing how much of each company's revenue is generated from businesses related to those themes.

The ETF carries an annual management fee of 0.5225%, including tax. Nomura said the product is intended to capture growth associated with government-backed strategic industries rather than simply tracking a broad stock index.

The launch reflects growing investor interest in Japanese companies involved in semiconductors, AI, defense, energy security, advanced manufacturing and other sectors receiving greater government support.

In corporate earnings, Lacto Japan reported higher sales but a sharp decline in profits for the six months through May.

The food importer and distributor recorded sales of 97.866 billion yen, up 2.7% from a year earlier. Operating profit fell 22.1% to 2.781 billion yen, while ordinary profit dropped 35.4% to 2.475 billion yen. Net profit attributable to shareholders declined 37.5% to 1.748 billion yen.

The company said its dairy ingredients and cheese operations were affected by weak domestic demand, inventory conditions and lower margins. Expenses also increased because of personnel, distribution and head-office relocation costs.

Its life sciences business performed more strongly, with sales rising 67.1% as the company expanded sales of high-protein ingredients. Lacto Japan left its full-year earnings and dividend forecasts unchanged.

TamaHome reported declining annual sales and profits as weakness in its main custom-built housing business outweighed growth in property operations.

Revenue for the year ended May fell 1.5% to 197.74 billion yen, while operating profit declined 6.6% to 3.842 billion yen. The company said fewer completed custom-built homes reduced revenue, although its property business recorded higher sales and earnings.

The housing company expects a substantial recovery in the current year as it works to strengthen earnings across its operations. Japan's homebuilders continue to face pressure from higher construction costs, labor shortages and a long-term decline in the number of households purchasing newly built detached homes.

Japan also secured another major semiconductor investment as Israel-based Tower Semiconductor announced plans to spend $3 billion expanding manufacturing in the country.

The project will receive around $1 billion in grants from the Japanese government and will focus on silicon photonics and silicon-germanium technology used in AI systems, data centers and energy-efficient semiconductor devices.

Tower plans to convert its Arai facility for 300-millimeter silicon photonics production, with full operations targeted for the fourth quarter of 2027. It will simultaneously begin developing another 300-millimeter production facility beside its existing Fab 7 plant.

The announcement adds to a series of government-backed semiconductor projects aimed at rebuilding Japan's chip-manufacturing capacity and reducing dependence on overseas supply chains.

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A large new typhoon formed near the Ogasawara Islands on August 12 and could approach Honshu around the end of the Obon holiday period, while the remnants of Typhoon No. 15 continue to bring unstable weather and a risk of heavy rain across a wide area of Japan.

Hiroko Saito was 19 years old when she left Japan for North Korea in June 1961 with her Korean husband and their one-year-old daughter, persuaded by assurances that they were heading to a "paradise on earth" and that she could return to Japan after three years. Instead, she would spend four decades in North Korea, enduring chronic hunger, the deaths of her husband and children and a desperate struggle to survive before finally escaping and returning home in 2001.

Transport disruption caused by Typhoon No. 15 was easing across eastern Japan on the morning of August 12, with most major railway and airline services returning to normal after dozens of flight cancellations and widespread rail disruption during the storm's landfall in Ibaraki Prefecture the previous evening.

Japan's H3 Rocket No. 9 successfully placed the Michibiki No. 7 navigation satellite into its planned orbit after lifting off from the Tanegashima Space Center in Kagoshima Prefecture at 4:23 a.m. on August 11, marking the country's second consecutive successful H3 launch.

The Tokaido Shinkansen operated its first overnight service ahead of the Obon holiday period, offering travelers a 15,000 yen trip from the Tokyo area to Kyoto and Shin-Osaka while allowing them to save on hotel costs and arrive earlier than the first regular morning trains.

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Hiroshi Okuda, a former president of Toyota Motor who helped lay the foundation for the automaker's emergence as one of the world's leading manufacturers, died of old age on August 8 at the age of 93.

Tokyo stocks ended nearly unchanged on August 12, with the Nikkei 225 at 66,988.82, as gains in energy and financial shares offset weakness in electronics and pharmaceuticals while investors weighed higher crude oil prices, a weaker yen and growing expectations for another Bank of Japan rate increase.

Sony Group and Taiwan Semiconductor Manufacturing Co. announced on August 11 that they have formally agreed to jointly produce next-generation image sensors, with total investment expected to reach about 1 trillion yen and mass production scheduled to begin in Kumamoto Prefecture in 2029.

Japan's street-level economic sentiment improved for a third consecutive month in July, supported by sharply hotter weather after the end of the rainy season and the start of the summer vacation period, with stronger sales of products including men's parasols and air conditioners.

Tokyo stocks rose on August 10, with the Nikkei 225 closing at 66,376.25, up 1.2%, as investors bought electronics, metals and artificial intelligence-related shares, while fresh signs of a more hawkish Bank of Japan debate kept attention on the yen, bond yields and the timing of the next rate increase.

Japan recorded a current account deficit of 92.3 billion yen in June, its first shortfall in 17 months, as a sharp increase in import costs outpaced growth in exports.

Several Bank of Japan policymakers have signaled support for accelerating interest rate increases, with one member warning that the pace of hikes could become faster than financial markets currently expect as the central bank pays greater attention to upside inflation risks.

A repeat of the sharp yen appreciation seen in the summer of 2024 is unlikely under current conditions, with persistently high U.S. interest rates and continued structural pressure on Japan's currency making another rapid surge difficult, according to UBS wealth management chief investment officer Daiju Aoki.