As per MRFR analysis, the Japan AI in IoT Market Size was estimated at 435.72 (USD Million) in 2023.The Japan AI in IoT Market is expected to grow from 558.6(USD Million) in 2024 to 8,450 (USD Million) by 2035. The Japan AI in IoT Market CAGR (growth rate) is expected to be around 28.012% during the forecast period (2025 - 2035)
Key Japan AI in IoT Market Trends Highlighted
Japan's emphasis on technical innovation and digital transformation, especially in manufacturing and logistics, is a major factor driving the country's IoT AI integration. The government has launched a number of initiatives to improve smart manufacturing, encouraging the application of AI and IoT to increase production and efficiency.Given Japan's aging population and declining labor force, this change is essential as companies turn to automation and intelligent systems to cover shortages. Additionally, there is a growing need for AI-enhanced IoT solutions due to Japan's smart city boom.
Cities like Tokyo are demonstrating the promise for better urban living through connected technology by utilizing AI for real-time data analysis in energy management and public transit. There are several opportunities in Japan's AI in IoT industry, especially in sectors like healthcare, where AI technology can support smart medical devices and remote patient monitoring.
The healthcare sector faces issues due to the aging population, and AI-driven IoT technologies can be essential to delivering prompt and effective healthcare services. In keeping with the growing trend toward sustainable practices, industries like agriculture are also investigating AI in IoT for precision farming to increase yields and resource management.
As AI in IoT technology advances, privacy and security are becoming increasingly important, according to recent developments in Japan. Japanese businesses are concentrating on integrating strong security measures into their IoT devices in response to growing worries about data security.
In order to spur innovation in AI and IoT solutions, there is also a discernible interest in startups and established businesses working together. These collaborations are essential for facilitating quick development and implementation, which is consistent with Japan's aggressive approach to taking the lead in the world of technology.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Japan AI in IoT Market Drivers
Government Initiatives and Support
The Japanese government has been proactive in promoting the integration of Artificial Intelligence in the Internet of Things, as part of its broader agenda for digital transformation. For instance, policies implemented under the 'Society 5.0' initiative aim to enhance the country's technological landscape by fostering innovation in AI and IoT.In a report by the Ministry of Internal Affairs and Communications, it was revealed that public investment in AI and IoT technologies is expected to reach approximately 1 trillion Japanese Yen by 2025.Â
This significant investment will help fuel growth in the Japan AI in IoT Market by creating a robust framework for technology development and adoption.Additionally, collaborations between the government and established organizations like NEC Corporation and Fujitsu Limited have been instrumental in advancing research and deployment of AI applications tailored for IoT devices, driving further growth in the market.
Increasing Adoption in Manufacturing
Japan's manufacturing sector is increasingly turning to Artificial Intelligence integrated with the Internet of Things to enhance productivity and efficiency. According to the Ministry of Economy, Trade and Industry, the implementation of smart factories could boost Japan's manufacturing output by an estimated 20% by 2030.
Major industrial players such as Toyota and Hitachi have invested heavily in AI and IoT technologies to optimize their operations, thereby establishing a significant impact on the Japan AI in IoT Market. This trend of automation and data-driven decision-making is expected to improve operational performance and drive considerable market growth in Japan.
Growing Demand for Smart City Solutions
The concept of smart cities is gaining momentum in Japan, as urban areas increasingly seek to improve living conditions and operational efficiency through technological advancements. Significantly, the Tokyo Metropolitan Government has committed to investing over 300 billion Japanese Yen towards developing smart city infrastructure and technologies by 2025.
Companies like Mitsubishi and SoftBank are leading initiatives in this sector by implementing AI-driven IoT solutions for traffic management, waste management, and energy efficiency. With urbanization trends continuing, the Japan AI in IoT Market is bound to benefit as smart city initiatives encourage the development and deployment of intelligent systems designed to enhance urban living.
Rising Demand for Enhanced Cybersecurity
As the number of connected devices continues to soar, the need for robust cybersecurity measures has become increasingly paramount in Japan. The National Institute of Information and Communications Technology reported a sharp increase in cyber threats, with a 50% rise in reported incidents between 2020 and 2021.
This alarming trend has prompted organizations to integrate AI solutions that bolster security in IoT environments. Corporations such as NTT Security Corporation are at the forefront of developing AI-based security systems for IoT networks, resulting in significant investments towards enhancing cybersecurity within the Japan AI in IoT Market.Consequently, the growing demand for such solutions is anticipated to drive development and innovation in this segment of the market.
AI in IoT Market Component Insights
The Component segment of the Japan AI in IoT Market is a critical area that encompasses various elements essential for the successful deployment and functionality of artificial intelligence within the Internet of Things ecosystem.This segment includes platforms, software solutions, and services, all of which play vital roles in transforming data into actionable insights. Platforms in this segment are crucial as they provide the foundation for AI algorithms to analyze and interpret data generated by IoT devices, enabling real-time decision-making and enhancing operational efficiency.
Software solutions aid in integrating AI with IoT, facilitating seamless communication between devices and enhancing user experience through smart functionality and automation.Furthermore, the services aspect of this segment includes consulting, system integration, and maintenance, which are indispensable for ensuring that AI technologies are effectively implemented and continuously optimized to adapt to evolving market demands.
Japan has been at the forefront of technological advancements, driven by a strong government focus on digital innovation and initiatives aimed at fostering a conducive environment for AI and IoT growth. The nation’s unique blend of advanced infrastructure and a well-developed manufacturing sector positions it favorably to leverage the benefits of AI in IoT solutions.
The Component segment is also witnessing increased investments from both public and private sectors, driven by a rising necessity to enhance productivity and sustainability in various industries, including manufacturing, healthcare, and transportation.The emphasis on smart cities and digital transformation further underscores the significance of platforms and software solutions, as they are indispensable for the automation of systems and improvement of services.
Additionally, the growing demand for data security and privacy is shaping the development of robust software solutions tailored to safeguard sensitive information, ensuring trust in AI applications. With advancements in machine learning and predictive analytics, the importance of these components will only intensify, enabling organizations to anticipate needs and streamline operations efficiently.
The dynamic nature of the market, coupled with consumer preferences for more connected and intelligent systems, propels growth within this segment and offers numerous opportunities for innovation and market entry.By addressing real-world challenges such as resource optimization and process control, the platforms, software solutions, and services within the Component segment are paving the way for substantial advancements and competitive advantage in the Japan AI in IoT Market landscape.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
AI in IoT Market Technologies Insights
The Technologies segment of the Japan AI in IoT Market is experiencing notable advancements driven by machine learning (ML), deep learning, and natural language processing (NLP). These technologies play a crucial role in enhancing the interconnectivity and efficiency of IoT devices.Machine learning and deep learning facilitate the processing of vast amounts of data generated by IoT sensors, enabling predictive analytics and real-time decision-making. In Japan, with its strong emphasis on automation and smart city initiatives, the application of ML and deep learning is dominating sectors such as manufacturing, healthcare, and transportation.
Natural language processing is increasingly significant as it allows for user-friendly interactions between humans and machines, improving customer service and operational efficiency across various sectors.The increasing need for automation and intelligent systems in Japan’s advanced economy is driving the growth of these technologies within the AI in IoT domain, fostering innovation and enhancing overall productivity.Furthermore, the effective integration of these technologies is anticipated to open new opportunities for enhancing user experiences and operational workflows in Japan's dynamic market landscape.
AI in IoT Market Vertical Insights
The Japan AI in IoT Market is characterized by its diverse vertical segmentation, including key sectors such as Manufacturing, Energy and Utilities, Transportation and Mobility, Banking, Financial Services and Insurance (BFSI), Government and Defense, Retail, Healthcare and Life Sciences, Telecom, and others.
Each of these sectors plays a crucial role in driving innovation and efficiency through the integration of artificial intelligence and Internet of Things technologies. Manufacturing stands out for its emphasis on automation and smart factories, which enhance productivity and reduce operational costs.
The Energy and Utilities sector benefits from predictive analytics for grid management and maintenance, supporting Japan's commitment to sustainable energy practices. Transportation and Mobility sees advancements through AI-enhanced logistics and smart transportation systems, which improve safety and reduce congestion.
In BFSI, AI facilitates risk assessment and fraud detection, vital for maintaining financial security. Government and Defense applications focus on cybersecurity and resource management, reflecting Japan's priority on national security. The Retail sector utilizes AI for inventory management and personalized customer experiences.
Healthcare and Life Sciences rely on smart monitoring systems for patient care, while Telecom companies leverage these technologies for more efficient network operations. This collective focus on vertical integration illustrates the potential and ongoing transformative impact of Japan AI in IoT Market across various industries, driving market growth and innovation.
Japan AI in IoT Market Key Players and Competitive Insights
The Japan AI in IoT Market is experiencing vigorous growth driven by advancements in technology and an increasing demand for automation across various sectors. Competition in this market is keen as numerous players aim to leverage artificial intelligence and Internet of Things capabilities to optimize operations, enhance customer experiences, and drive innovation.
Companies are deploying AI solutions to collate and analyze massive datasets collected from IoT devices, paving the way for smarter city initiatives, manufacturing efficiencies, and improved healthcare services. Integration of AI with IoT technology enables predictive analytics, machine learning applications, and real-time decision-making, which is crucial for maintaining a competitive edge in this evolving landscape.The landscape is characterized by continuous investments in research and development, strategic partnerships, and collaborations among incumbents to harness the potential of these interconnected technologies.
Aisin has established a proficient presence in the Japan AI in IoT Market, focusing on the manufacturing and automotive sectors. The company leverages its expertise in producing advanced automotive components and systems to integrate AI technology into IoT applications aimed at enhancing vehicle performance and safety.
Aisin's strengths lie in its robust supply chain and innovative engineering capabilities, which enable the development of smart solutions for manufacturers and consumers alike. The company's commitment to sustainability and efficiency further enhances its position in the market by offering IoT-enabled products that optimize resource use and reduce environmental impact.
Aisin's strategic collaborations with key industry players also bolster its market presence, allowing it to remain competitive in the dynamic landscape of AI in IoT.NEC is another formidable competitor in the Japan AI in IoT Market, recognized for its innovative solutions and contributions across various industries, including telecommunications, cybersecurity, and public safety.
The company offers an array of key products and services, such as AI-driven analytics platforms, smart infrastructure solutions, and IoT security systems, all tailored for the Japanese market. NEC's strengths lie in its advanced technology capabilities and deep industry knowledge, allowing it to deliver integrated systems that meet the unique demands of local clients.
The company has actively pursued mergers and acquisitions to enhance its portfolio and strengthen its market position, further positioning itself as a leading provider of AI and IoT services. Its comprehensive approach to fostering partnerships, coupled with a commitment to developing cutting-edge solutions, solidifies NEC’s stature in the competitive landscape of Japan's AI in IoT Market.
Key Companies in the Japan AI in IoT Market Include
Japan AI in IoTMarket Developments
The largest AI supercomputer in Japan was introduced by NEC in March 2023 and featured 928 NVIDIA A100 Tensor Core GPUs. At their Innovation Day in December 2023, NEC showcased developments in generative AI and other technologies.At CEATEC 2023 in October 2023, Toshiba presented technologies aimed at attaining carbon neutrality and safe and secure infrastructure. Mitsubishi Electric improved edge AI capabilities in June 2025 by creating an edge-device language model for industrial applications.
Mitsubishi Electric made an investment in a generative AI startup in July 2025 with the goal of fusing AI technology with its manufacturing experience. NTT Data demonstrated a strong commitment to AI innovation in July 2025 when it announced the filing of 509 patents relating to AI, including 149 that were centered on generative AI.
Yaskawa Electric displayed its robotics and artificial intelligence solutions at the International Robot Exhibition (iREX 2023) in November 2023. Ricoh worked with CollaboGate Japan and Sassor in September 2023 to develop a virtual power plant system that makes use of decentralized IDs.To encourage AI proficiency among its employees, Ricoh introduced an AI Evangelist certification program in 2024. Omron launched the "AIZAQ" generative AI project in 2023 with the goal of using generative AI to create a creative society and smart working methods.
Japan AI in IoT Market Segmentation Insights
AI in IoT Market Component Outlook
AI in IoT Market Technologies Outlook
AI in IoT Market Vertical Outlook
| Report Attribute/Metric Source: | Details |
| MARKET SIZE 2023 | 435.72(USD Million) |
| MARKET SIZE 2024 | 558.6(USD Million) |
| MARKET SIZE 2035 | 8450.0(USD Million) |
| COMPOUND ANNUAL GROWTH RATE (CAGR) | 28.012% (2025 - 2035) |
| REPORT COVERAGE | Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
| BASE YEAR | 2024 |
| MARKET FORECAST PERIOD | 2025 - 2035 |
| HISTORICAL DATA | 2019 - 2024 |
| MARKET FORECAST UNITS | USD Million |
| KEY COMPANIES PROFILED | Aisin, NEC, Toshiba, Mitsubishi Electric, NTT Data, Yaskawa Electric, Ricoh, Omron, CyberAgent, Panasonic, Sony, Hitachi, SoftBank, Fujitsu |
| SEGMENTS COVERED | Component, Technologies, Vertical |
| KEY MARKET OPPORTUNITIES | Smart manufacturing optimization, Urban mobility solutions, Predictive maintenance services, Energy management systems, Healthcare monitoring advancements |
| KEY MARKET DYNAMICS | Growing demand for smart cities, Increasing industrial automation, Rising adoption of cloud computing, Enhanced data analytics capabilities, Expansion of 5G networks |
| COUNTRIES COVERED | Japan |
Frequently Asked Questions (FAQ):
The Japan AI in IoT Market is expected to be valued at 558.6 million USD in 2024.
By 2035, the Japan AI in IoT Market is projected to reach a valuation of 8,450.0 million USD.
The expected compound annual growth rate (CAGR) for the Japan AI in IoT Market is 28.012% from 2025 to 2035.
Key players in the market include Aisin, NEC, Toshiba, Mitsubishi Electric, and NTT Data among others.
The market size for Platforms in the Japan AI in IoT Market is expected to be 200.0 million USD in 2024.
The Software Solutions segment is projected to grow to 2,500.0 million USD by 2035.
The Services segment is expected to be valued at 208.6 million USD in 2024.
The Japan AI in IoT Market is anticipated to experience significant growth, driven by evolving technology and increasing adoption.
By 2035, Platforms are expected to dominate the Japan AI in IoT Market with an estimated value of 3,000.0 million USD.
Key growth drivers include advancements in AI technology, rising demand for automated solutions, and increased IoT applications across various industries.
Leading companies partner with us for data-driven Insights.
Kindly complete the form below to receive a free sample of this Report
Team Lead - Research she holds an experience of about 6+ years in market research and business consulting, working under the spectrum of information communication technology, telecommunications and semiconductor domains. aarti conceptualizes and implements a scalable business strategy and provides strategic leadership to the clients. her expertise lies in market estimation, competitive intelligence, pipeline analysis, customer assessment, etc.
© 2025 Market Research Future ® (Part of WantStats Reasearch And Media Pvt. Ltd.)
