TOKYO - Japan’s digital economy is facing a growing challenge: a trade deficit exceeding 7 trillion yen driven by the surge in cloud services and generative AI. Most of the software and cloud tools used daily on computers and smartphones are provided by major overseas tech firms, particularly those based in the United States.
As Japanese companies accelerate digital transformation, their spending on foreign IT services continues to rise, pushing the digital trade deficit beyond 6 trillion yen in 2024. With further growth projected, the key to reversing this trend lies in the development and strategic use of domestic data centers. These facilities, which support both cloud infrastructure and generative AI technologies, are expected to generate 5 trillion yen in sales by 2027, while investment in building and expanding such centers is projected to reach 1 trillion yen over the same period.
The growing demand for domestic data centers is drawing strong interest from foreign investors. However, while such investment helps expand infrastructure, it also risks sending profits abroad, further deepening Japan’s digital outflow. Another looming issue is energy consumption. About 90% of Japan’s data centers are located in the Tokyo and Kansai metropolitan areas, where demand for digital services is highest. The concentration has led to serious strain on power supply. By fiscal 2037, electricity demand from data centers in the Tokyo area alone is expected to match that of a full-scale nuclear power plant.
To address the imbalance between digital infrastructure and energy supply, attention is turning to so-called "W-bit integration"—a concept combining the “W” of watts (electric power) with “bits” of information. The plan aims to jointly develop the power grid and data transmission network. NTT is developing high-speed optical communications technology that could enable low-latency, high-capacity data transmission across long distances. This could allow for the decentralization of data centers away from urban areas while still maintaining high performance. Optical fiber cables cost only a tenth of power cables per kilometer, making such deployments faster and more economical.
Spreading data centers across the country using advanced fiber-optic networks could ease the burden on urban power supplies and strengthen Japan’s digital competitiveness. As reporter Nakanishi notes, leveraging the latest technologies may be Japan’s best hope of reversing its massive digital trade deficit.
Source: テレ東BIZ
