Japan’s AI gambling: Can technology solve the cost of aging? | | Science and Technology

Tokyo, Japan – Underneath the business towers of Tokyo’s Otemachi district, tests are underway to see if artificial intelligence can help solve one of Japan’s biggest economic problems: the labor shortage.

At its core, Marunouchi Heat Supply Company operates a 30km (18.6-mile) network of heating and cooling pipes that serve offices, commercial buildings and transportation in one of Japan’s most important locations. The company is now using AI to manage these complex structures with the goal of moving towards automation by 2027.

Developed by Tokyo-based AI company Preferred Networks, the project uses PlantPilot, an AI system trained on historical operational data and the skills of experienced engineers. By analyzing sensor data and predicting the future, the system provides recommendations designed to improve performance and save years of experience.

For Japan, a world leader in aging, the project represents more than infrastructure improvements. It represents a broader response to the social crisis that is reshaping the world’s third largest economy.

“Our biggest problem is finding talented people,” said Hidetaka Yagi, assistant director of the Development and Engineering Department at Marunouchi. “When knowledge workers retire, we face the risk of losing valuable knowledge in the workplace. AI can help preserve this technology and pass it on to the next generation.”

‘The goal is to use AI to solve real problems’

Japan’s aging population has led to labor shortages in all industries, from manufacturing and processing to energy and health care. Contrary to concerns in other countries that automation will replace workers, Japan is increasingly positioning AI as a companion – a tool to enhance human skills rather than eliminate them.

Marunouchi’s experiments demonstrate this approach. The goal is not to remove engineers from decision making but to combine human experience with AI capabilities to process large amounts of data and support faster and more efficient decisions.

However, Japan’s AI challenge goes beyond improving existing systems. The country is also seeking to rehabilitate its position in the global technology competition that has struggled to catch up with the United States and China.

Despite its reputation as a technology leader, Japan has produced the fewest companies in the world. The US has about 690 unicorn startups – private companies valued at more than $1bn – while China has about 160. Japan has only eight companies, showing the gap between its technology history and its startup ecosystem.

One company that wants to change this image is Sakana AI, one of Japan’s most highly regarded artificial intelligence startups. Based in Tokyo, the company has grown rapidly, growing from about 50 employees to 150 within a year. It has gone beyond commercial research, introducing products such as Sakana Chat, Sakana Marlin and Sakana Fugu.

For Ren Ito, chairman of Sakana AI, Japan’s path to AI leadership should not rest on just copying Silicon Valley.

“If we try to compete with American companies in the same way, we will not succeed,” Ito said. “Japan needs to create different ideas, attract talented researchers and create new and innovative ways.”

Ito said that the future of AI will not belong to countries that spend a lot of money building the biggest models. Developing advanced AI systems requires a lot of resources with US companies such as OpenAI, Google and Anthropic investing heavily in computer hardware and research.

Instead, he said, Japan’s advantage may come from how it applies AI to real-world problems.

“The goal is not to reform OpenAI in Japan,” Ito said. “The goal is to use AI to solve real problems.”

This vision reflects the traditional Japanese power: to transform technology and turn it into practical solutions. Instead of focusing on developing large-scale AI models, Japan can expand its capabilities in sectors such as energy, manufacturing and healthcare by integrating AI into existing industries.

The Japanese government is also putting AI at the center of its economic strategy. Tokyo plans to mobilize about 370 trillion yen ($2.3 trillion) in public and private investment by 2040, targeting artificial intelligence, semiconductors and advanced research.

Yet money alone may not be enough to restore Japan’s technological influence. The country’s research position has been weakened in recent years by its challenges including financial pressure, competition for talent and the need to strengthen universities and research institutions.

For policymakers, the lesson is clear: AI leadership depends not only on technology and funding but also on developing researchers, innovators and the next generation of scientific talent.

Japan’s AI strategy, therefore, is driven by necessity and ambition. The country is trying to use technology to respond to the decline in population while creating a model of innovation relevant to its situation.

Artificial intelligence may not completely solve Japan’s economic problems, but it is becoming an important tool in the country’s efforts to remain profitable, competitive and sustainable in a time of great change.