In-Depth Analysis Report on the Global Competitiveness of Japan's ICT Industry

Now, I will synthesize this information to provide you with an in-depth analysis report on the global competitiveness of Japan’s ICT industry.

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Japan’s ICT industry occupies an important position globally. According to data from Mordor Intelligence,

, and is expected to grow to USD 574.6 billion by 2030, with a compound annual growth rate (CAGR) of 7.28%[1]. This growth is mainly driven by the full advancement of enterprise digital transformation, increased capital expenditure on hyperscale data centers, and the government’s “cloud-first” policy.

Japan’s ICT market exhibits a diversified structure: IT hardware and software together account for approximately 59% of the market share, while IT services account for about 41%[1]. The market concentration is at a moderate level, with a relatively fragmented competitive landscape and no absolute dominant monopolistic enterprises.

According to the digital indicator system of the International Telecommunication Union (ITU), Japan has performed steadily in digital infrastructure construction:

Indicator Dimension	Japan’s Performance
International Broadband Usage	Upper-Mid Tier
Number of Active Mobile Broadband Users	High per 100 people
Fixed Broadband Subscribers	Leading penetration rate among developed countries
Internet Penetration Rate	Approximately 96% (highly penetrated)
Share of ICT Product Exports	Approximately 9%
Share of High-Tech Exports in Manufacturing Exports	Approximately 11%

Notably, research on the impact of digitalization level on electronic industry exports shows that Japan’s digitalization effect elasticity to developing countries is 2.33, significantly higher than the 0.83 of developing countries, indicating that Japan should focus on promoting digital infrastructure construction and institutional coordination in developing countries under the RCEP framework[2].

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Japan occupies an

, with its strategic advantages concentrated in two major areas: semiconductor manufacturing materials and core equipment. In 2024, Japanese enterprises held approximately and a staggering , forming systematic dependence and “invisible monopoly” on global advanced manufacturing processes[3].

According to the Critical and Emerging Technologies Index 2025 report,

, with particularly outstanding performance in semiconductors and biotechnology[4]. However, its main gaps with the US and China, which rank 1st and 2nd, lie in , reflecting Japan’s relative weakness in semiconductor software-related fields.

Japan has extremely high technological barriers in semiconductor materials, mainly reflected in its ultimate control over the entire chain of material purity and synthesis processes:

Material Segment	Global Market Share	Representative Enterprises
Silicon Wafers	Approximately 68% (Shin-Etsu Chemical and SUMCO account for over 50% combined)	Shin-Etsu Chemical, SUMCO
Semiconductor Coating/Developing Equipment	Approximately 90%	Tokyo Electron (TEL)
EUV Photoresist	Approximately 96.7%	JSR, Tokyo Ohka Kogyo, etc.
ArF Photoresist	>90%	Multiple Japanese Enterprises
Silicon Wafers	Approximately 53%	Shin-Etsu Chemical, SUMCO

Especially in the EUV photoresist field, Japan’s technological advantage is almost monopolistic, with material purity reaching the ppt level (parts per trillion), a gap of more than 1000 times compared to the common ppb level[3].

Japan ranks

, second only to the US. According to data from the Semiconductor Equipment Association of Japan (SEAJ), Japan’s chip equipment sales reached JPY 424.59 billion in September 2025, a year-on-year increase of 14.9%, , including 18 consecutive months of double-digit growth[5].

Japan dominates in the following equipment areas:

• Coating/Developing Equipment
  : Holds a 90% global market share, an essential supporting device for all advanced process lithography machines
• Heat Treatment Equipment
  : Leading position globally
• Cleaning Equipment
  : Strong position in single-wafer and batch cleaning equipment
• CMP Equipment
  : Critical dimension measurement and chemical mechanical polishing equipment

Japanese enterprises account for four of the top 10 global semiconductor equipment manufacturers:

[5].

The Japanese government attaches great importance to the revival of the semiconductor industry. Since formulating the chip industry revival strategy in 2021, it has allocated approximately

to support the related industry. The domestic chip company , which received JPY 1.7 trillion in funding, plans to achieve mass production of cutting-edge chips by 2027, marking a key step for Japan to reshape its semiconductor competitiveness[6].

According to data from Fortune Business Insights,

, and is expected to grow to USD 175.25 billion by 2034, with a compound annual growth rate of 15.8%[7]. The network and communication sector is the largest application segment, accounting for 32.7% of the market.

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Japan’s AI market is in a period of rapid growth. According to data from the US International Trade Administration,

, and is expected to increase to USD 27.9 billion by 2029, tripling in size[8]. Mordor Intelligence is even more optimistic, predicting that Japan’s AI market will reach USD 27.12 billion by 2032[9].

However, Japan still has an obvious

in generative AI applications. According to data from the 2025 Information and Communications White Paper released by Japan’s Ministry of Internal Affairs and Communications (MIC) in July 2025, the penetration rate of generative AI among Japanese individuals is only , about one-third of China’s (81.2%), and far lower than that of the US (68.8%) and Germany (59.2%)[10]. Nevertheless, Japan’s AI user base is expanding rapidly, showing huge growth potential and business opportunities.

On May 28, 2025, the Japanese government officially implemented the

, establishing a basic framework for promoting AI innovation while managing related risks. The bill sets two core goals: and [8].

The Japanese government simultaneously established an AI Strategy Office, responsible for coordinating Japan’s AI research, development, and deployment policies. Key initiatives include:

• Promoting R&D activities
• Expanding data infrastructure
• Ensuring the supply of high-skilled talent
• Participating in international standard-setting
• Ensuring transparency

According to Stanford University’s Global AI Vibrancy Ranking,

and , showing significant room for improvement[11].

Japan’s strengths and challenges in the AI field:

Strengths	Challenges
Strong manufacturing foundation (industrial robots, automation)	Low adoption rate of generative AI
Technological accumulation in semiconductor materials and equipment	Relatively insufficient AI talent reserve
Strong government policy support	Less vibrant startup ecosystem
AI applications in specific verticals (e.g., automotive, healthcare)	Gap with China and the US in general-purpose large models

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In the 5G communication field, Japan’s major operators NTT Docomo, KDDI, SoftBank, and Rakuten Mobile are actively deploying 5G network infrastructure. However, compared with China and the US, Japan’s 5G penetration rate is relatively moderate. According to relevant reports,

, and the global 5G RAN equipment market is mainly dominated by vendors such as Huawei, Nokia, Ericsson, and Samsung.

A notable trend is that Japanese enterprises demonstrate strong industrial application capabilities in the 5G private network (Private 5G) field, particularly in manufacturing automation and industrial IoT scenarios.

Japan’s layout in quantum technology can be traced back to 1985, and in recent years it has actively seized the high ground of next-generation computing technology. Japan’s Quantum Technology Innovation Strategy proposes ambitious goals of achieving

, , and by 2030[11].

Japan launched basic research on cutting-edge technologies including quantum science in 1985, and conducts a national technology foresight survey every five years, forming a closed-loop mechanism of “data - vision - policy”[6].

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From a global perspective, Japan’s ICT industry competitiveness presents the following characteristics:

Comparison Dimension	Japan	US	China	South Korea
Semiconductor Chip Design	Weak	Extremely Strong	Catching Up Quickly	Strong
Semiconductor Manufacturing	Moderate	Strong	Rapidly Improving	Strong
Semiconductor Equipment	Extremely Strong	Extremely Strong	Catching Up	Moderate
Semiconductor Materials	Extremely Strong	Strong	Catching Up	Moderate
AI Technology	Strong	Extremely Strong	Extremely Strong	Strong
5G/Communication Equipment	Weak	Moderate	Extremely Strong	Strong
Software/Internet	Moderate	Extremely Strong	Extremely Strong	Strong

According to the Critical and Emerging Technologies Index 2025 report, Japan’s global rankings in key technology sectors are as follows:

Technology Sector	Japan’s Ranking
Overall Ranking	4th
Semiconductors	Top Tier (Advantage Sector)
Biotechnology	Top Tier
Quantum Technology	Upper-Mid Tier
Artificial Intelligence	Upper-Mid Tier
Software/Design Tools	Relatively Lagging

The report points out that Japan’s score is similar to that of top European countries and South Korea, and

[4].

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Japanese enterprises excel in process equipment related to handling non-fixed form materials such as liquids, gases, and fluids, which is inseparable from their “bottom-up” R&D model. Japanese technical personnel are adept at perfecting processes within a framework that requires repeated trials and continuous optimization, relying on excellent perception ability and extreme attention to detail[5].

Japan has formed a complete industrial ecosystem in the upstream materials and equipment sectors of the semiconductor industry chain. Even in equipment segments where Japanese enterprises have a relatively low market share, their strong upstream component industry (such as high-purity quartz products, precision ceramic components, etc.) still plays a key role.

Through the “Society 5.0” vision, the Japanese government integrates all future industrial policies under this national strategic framework, forming a systematic promotion mechanism from technology foresight, strategic planning to implementation. The practice of “conducting a technology foresight survey every five years” ensures a high degree of alignment between technological routes and national strategies[6].

Japan’s long-term investment in basic science has accumulated profound technological heritage, particularly in underlying technology fields such as materials science and precision manufacturing.

Japan has obvious shortcomings in software-related fields such as chip design and design tools, which restricts its overall competitiveness in high-end chip sectors. The gap with China and the US in general-purpose large models and AI algorithms is particularly evident.

Although Japan has strong academic research capabilities, the conversion efficiency from basic research to commercial applications needs to be improved. While the industry-university-research collaboration mechanism is improving, it still lags behind innovative ecosystems such as Silicon Valley and Israel.

Japan faces serious aging problems and a shortage of AI talent. According to Stanford University’s rankings, Japan ranks only 16th-17th in AI skill penetration and talent concentration, and needs to address this by attracting international talent and reforming the education system[11].

The decision-making process of large Japanese enterprises is relatively conservative, the startup ecosystem is not vibrant enough, and it lags behind China and the US in disruptive innovation.

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Growth Driver	Specific Performance
AI Server Demand	Strong demand for GPUs and HBM (High Bandwidth Memory) drives equipment investment
Advanced Process Investment	Mass production of 2nm chips by manufacturers such as TSMC drives equipment procurement
Automotive Electrification	Sustained growth in demand for automotive chips
Data Center Expansion	Accelerated construction of hyperscale data centers
Government Policy Support	JPY 5.7 trillion semiconductor industry support program

Based on the above analysis, Japan’s ICT industry should focus on the following directions for future development:

1. Consolidate Advantages in Materials and Equipment
   : Continue to deepen engagement in semiconductor materials and equipment sectors, leveraging technological barriers to maintain global leadership

2. Address Design Shortcomings
   : Reshape advanced process manufacturing capabilities through projects such as Rapidus, while strengthening cooperation with design tool enterprises

3. Popularize AI Applications
   : Accelerate the penetration of generative AI in various industries, particularly manufacturing and services

4. Upgrade Talent Strategy
   : Reform the education system, attract international AI talent, and build a multi-level talent echelon

5. Deepen International Cooperation
   : Strengthen technological cooperation with allied countries under the “Society 5.0” framework, particularly in supply chain security and standard-setting

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Based on the above analysis, we can draw the following conclusions:

: It has extremely strong discourse power in upstream materials and equipment sectors, but is relatively weak in downstream chip design and system integration sectors.

: From the “Society 5.0” vision to the JPY 5.7 trillion semiconductor investment, from Rapidus’ 2nm chip plan to the enactment of the AI Promotion Act, Japan is taking a multi-pronged approach.

: Relying on its monopolistic advantages in materials and equipment, Japan will continue to play an indispensable role in the global ICT industry chain.

: Its ability to successfully integrate AI technology with traditional manufacturing advantages, and to achieve breakthroughs in emerging fields such as quantum computing, will determine whether Japan can maintain and enhance its position in the global ICT landscape.

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[1] Mordor Intelligence - Japan ICT Market Size, Trends, Share, 2030 Report (https://www.mordorintelligence.com/industry-reports/japan-ict-market)

[2] The Impact of Digitalization Level and Regional Economic Integration on Japan’s Electronic Industry Exports - World Economic Exploration (https://pdf.hanspub.org/wer_2350605.pdf)

[3] Japan’s Semiconductor Industry: From Global Dominance to the Technological Landscape of Key Process Equipment - Chip Technology Circle (https://www.eet-china.com/mp/a455800.html)

[4] Critical and Emerging Technologies Index 2025: Japan Report - Belfer Center (https://www.belfercenter.org/sites/default/files/2025-06/CountryMemo_Japan_June 2025.pdf)

[5] Japan’s Chip Equipment Sales Boom, Ranked 2nd Globally Only to the US - Keqidao (https://www.keqidao.com/detail?id=451584486080517)

[6] Research on Japan’s Future Industrial Development: Current Status, Trends and Insights - CCIDNet (https://ccidnet.com/202512/1095694.jhtml)

[7] Japan Semiconductor Market Size, Share, Growth - Fortune Business Insights (https://www.fortunebusinessinsights.com/japan-semiconductor-market-114819)

[8] Japan Artificial Intelligence - US Trade.gov (https://www.trade.gov/market-intelligence/japan-artificial-intelligence)

[9] Japan Artificial Intelligence Market - Spherical Insights (https://www.sphericalinsights.com/images/rd/japan-artificial-intelligence-market.png)

[10] Japan and South Korea’s Generative AI Boom - Antom Knowledge (https://knowledge.antom.com/japan-and-south-koreas-generative-ai-boom-trends-challenges-and-untapped-opportunities)

[11] A Policy Framework for Building the Future of Science with AI in Japan - Google Public Policy (https://publicpolicy.google/resources/ai_policy_framework_science_jp_en.pdf)

[12] Japan Semiconductors - US Trade.gov (https://www.trade.gov/country-commercial-guides/japan-semiconductors)

[13] Japan ICT Market Statistics - IMARC Group (https://www.imarcgroup.com/japan-ict-market-statistics)

[14] Huawei Named the Sole Leader in GlobalData’s 2025 5G RAN Competitiveness Assessment Report - Huawei Official Website (https://www.huawei.com/cn/news/2025/8/globaldata-huawei-5gran-leader)

[15] The Impact and Implications of the “US-Japan Semiconductor Agreement” on Japan’s Semiconductor Industry Competitiveness - Chung-Hua Institution for Economic Research (https://www.cier.edu.tw/site/cier/public/data/NO217-「美日半導體協定」對日本半導體產業競爭力之影響與啟示.pdf)

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Report Generation Date: January 10, 2026

Data Sources: International authoritative research institutions, official government data, industry analysis reports