Nvidia Plans Network of Chip Plants in Japan to Meet AI Demand

Yoshiaki Nohara, Bloomberg News

Signage at the Nvidia Corp. offices in Taipei, Taiwan, on Friday, June 2, 2023. Photographer: I-Hwa Cheng/Bloomberg , Bloomberg

(Bloomberg) -- Nvidia Corp. plans to help build an AI tech-related ecosystem in Japan to meet demand in a country eager to gain an edge in artificial intelligence.

The Santa Clara, California-based company will seek to partner with Japanese research organizations, companies and startups to build factories of AI, Chief Executive Officer Jensen Huang said during opening remarks in a meeting with Japanese Economy Minister Yasutoshi Nishimura Tuesday. Nvidia will set up an AI research laboratory and invest in local startups and educate the public on using AI, Huang said.

Nvidia’s graphics chips, which process large amounts of data by performing calculations in parallel, have become the leading tool for training AI services. Prices for Nvidia chips have surged as companies and governments fight to develop their own AI prowess. Huang earlier this week met with Japanese Prime Minister Fumio Kishida and promised to do his best to prioritize Japan, according to local news reports.

“We will build a network of AI factories here in Japan, so that Japan can process the data of the society and create intelligence for the society and for the industry,” Huang said.

Tokyo is trying to regain tech leadership by leveraging its expertise in materials science and chipmaking tools and by supplying billions of dollars in subsidies to ramp up domestic production of cutting-edge semiconductors. But it’s largely missed out on the lion’s share of profits related to generative AI so far. Huang said that Japan could build its own AI ecosystem.

“Japan has all of the technical expertise, the industrial capability to create your own artificial intelligence right here in Japan,” Huang told Nishimura, adding that Japan has decades of expertise in megatronics, manufacturing and robotics.

Japan can build its own AI infrastructure, harnessing Japanese data and create its own AI, he said. “There is no reason to export Japan’s data. There is no reason to export Japan’s artificial intelligence.”

Nvidia supplies chips to Japanese companies including SoftBank Corp., NEC Corp., Nippon Telegraph & Telephone Corp.’s mobile and data services arms, as well as Sakura Internet Inc. and Mitsui & Co., Jensen said. All are locked in a race to to build Japan-specific AI infrastructure. Shares of Sakura Internet jumped 7.6% to close at ¥1,927, the highest in almost eight years. SoftBank and NTT were little changed, and NEC fell 3.6% while Mitsui shed 1.4%.

“For Japan to develop its own generative AI, we need Nvidia’s GPUs. We cannot do it without collaborating,” Nishimura said. “I’d like to see Japan lead the world in innovation through deepened partnership with Nvidia.”

--With assistance from Debby Wu and Winnie Hsu.

(Adds share price reaction of Nvidia clients.)