In Japan, the robot doesn’t come for your job; it’s filling that no one wants

Physical AI appears to be one of the industrial battlegrounds, with Japan’s push driven more by necessity than anything else. With workforces shrinking and pressure to maintain productivity, companies are increasingly deploying AI-powered robots in factories, warehouses, and critical infrastructure.

Ministry of Finance, Trade and Industry of Japan he said in March 2026 that aims to build a domestic AI sector and capture a share of 30% of the global market by 2040. The country already has a strong position in industrial robotics, with Japanese manufacturers responsible for almost 70% of the entire market in 2022, depending on the service.

Based on interviews with investors and industry executives, TechCrunch analyzed what’s driving this change, how Japan’s approach differs from the US and China, and where the benefits will be seen as the technology matures.

Driven by unemployment

A number of factors are driving adoption in Japan, including a cultural acceptance of robotics, job cuts driven by social pressure, and industrial strength in machinery and electronic supply chains, Woven Capital Managing Director Ro Gupta told TechCrunch.

“Physical AI is being marketed as an ongoing tool: how do you keep factories, warehouses, infrastructure, and operations running with fewer people?” Hogil Doh, senior partner of Global Brain, also said. From what I see, labor shortage is the main driver.

Of Japan population crunch is fast. The population decreased the next 14th year in 2024; those of working age up to 59.6% in total, the sector is expected to decline by about 15 million over the next 20 years, Doh said. It is reshaping the way companies operate: 2024 Reuters/Nikkei survey unemployment is what is pushing Japanese companies to adopt AI.

“The driver has changed from a simple task to an industrial lifestyle,” Sho Yamanaka, head of Salesforce Ventures, said in an interview with TechCrunch. “Japan is facing a physical crisis where essential services cannot continue due to unemployment. Due to the limited number of workers, physical AI is an important issue for the country to maintain the standards of industry and social services.”

Japan is stepping up its efforts to mechanize manufacturing and processing, according to Mujin CEO and co-founder Issei Takino. The government has been promoting automation to deal with structural problems such as unemployment. Mujin, a Japanese company, has developed software that allows industrial robots to perform automatic collection tasks. Mujin’s approach focuses on software — specifically robotics control systems — that allow existing equipment to operate more consistently and efficiently, Takino said.

Hardware power, system risk

Where Japan has historically excelled is in the construction of robotics. Whether that opportunity translates into the AI ​​era is an open question. The country continues to show strength in key areas of robotics such as actuators, sensors and control systems, according to Japan-based venture capitalists, while the US and China are moving very quickly. set up a full machine which integrates hardware, software and data.

“Japan’s expertise in high-precision components – the interface between AI and the real world – is a good strategy,” Yamanaka said. “Controlling this space provides a competitive advantage globally. The key here is to accelerate system optimization by deeply integrating AI models with these tools.”

Hardware skills are very strong in China and Japan, with Japan particularly strong in robotics, while the US leads the service sector and market development, Takino said. In the past, many US companies have used their software strengths to build integrated businesses – similar to Apple – combining robust software platforms with advanced hardware from Asia. However, this model may not fully translate to the emerging world of physical AI, Takino said.

“In robotics, especially in Physical AI, it’s important to understand the physical properties of the hardware,” Takino said. “This requires not only software skills, but also special control technologies, which take time to develop and cost a lot of money.”

WHILL, the Tokyo- and San Francisco-based startup that makes self-driving cars, is adopting Japan’s “monozukuri,” or artistic heritage, as it takes a broad and comprehensive approach to global expansion, CEO Satoshi Sugie told TechCrunch. The company has developed an integrated platform combining electric vehicles, ground sensors, navigation systems and cloud-based fleet management for short-haul and autonomous transportation. The company is using Japan and the US for development, using Japan to refine equipment and address the needs of the elderly, and the US to accelerate software development and test large-scale commercial models, Sugie said.

From pilots to real world jobs

The government is putting money behind the push. Under Prime Minister Sanae Takaichi, Japan took action $6.3 billion to boost AI innovationThe integration of advanced robotics and support for industrial deployment.

The transition from testing to actual deployment is already underway. Industrial automation is still the leading sector, with Japan installing thousands of robots every yearespecially in the automotive sector. New programs are also gaining traction, Doh said.

“The brand is simple – referrals to paid customers instead of trying to spend money on suppliers, reliable service in all cases, and performance indicators such as uptime, human intervention and productivity results,” said Doh.

For operations, companies are deploying forklifts and warehousing machines, while for facility management, inspection robots are being used in data centers and warehouses.

Companies like SoftBank are already using physical AI in practice, combining forms of vision language and real-time control systems to enable robots to interpret environments and perform complex tasks on their own.

In defense, as autonomous systems become mainstream, competition will depend not only on platforms but also artificial intelligence powered by physical AI, Terra Drone CEO Toru Tokushige told TechCrunch. Tokushige added that by combining operational data with AI, Terra Drone is working to make autonomous systems work reliably in real-world environments and help improve Japan’s national security.

Investment is shifting beyond hardware, with companies allocating more money to orchestration software, digital twins, parallel hardware and integration platforms, according to investors and industry sources.

The rise of hybrid ecosystems

Japan’s AI ecosystem is also moving in ways that are different from traditional disruptions. Instead of success, participants expect a hybrid model, with established companies offering growth and reliability, while startups drive software innovation and system design.

Major incumbents, including Toyota Motor Corporation, Mitsubishi Electric, and Honda Motor, retain manufacturing advantages, customer relations, and shipping capabilities. But startups are creating important roles in emerging areas such as software orchestration, visual systems, and operating systems.

“The relationship between startups and established organizations is mutually beneficial,” Yamanaka said. “Robots require intensive hardware development, deep expertise, and high investment.” By combining the wealth and expertise of large companies and disrupting the innovation of startups, companies can strengthen global competitiveness.”

Japan’s defense industry has also shifted from the dominance of large companies to large partnerships with startups, Terra Drone CEO said. Large companies remain focused on platforms, growth and integration, while startups are driving development in smaller systems, software and applications, with speed and flexibility being key competitive factors.

Companies like Mujin are developing platforms that sit on top of hardware, enabling multi-vendor automation and rapid industrial deployment. Others, including the Terra Drone, are using similar techniques and autonomous systems, combining AI and operational data to support real-world operations.

“The most secure price will be with everyone who has work, integration, and continuous improvement,” said Doh.