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AI drives cloud investments in Japan, with AWS set to invest $15 billion

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AWS invests in Japan

Amazon Web Services (AWS) has unveiled plans to invest 2.26 trillion yen (approximately $15.24 billion) by 2027 to bolster its cloud computing capabilities and support the expanding artificial intelligence (AI) services in Japan. The commitment follows its previous investment of 1.51 trillion yen between 2011 and 2022, dedicated to enhancing Japan’s cloud capacity.

Digital infrastructure plays a pivotal role in fostering technological advancements, particularly in AI, and contributes significantly to research and development capabilities. AWS recognizes the importance of a robust cloud foundation to support its suite of artificial intelligence solutions. This substantial investment will primarily focus on expanding AWS facilities in Tokyo and Osaka, responding to the surging demand from customers in these metropolises.

AWS is a vital player in providing generative AI services to major Japanese corporate clients, including Asahi Group, Marubeni, and Nomura Holdings, positioning itself as a key contributor to the nation’s digital infrastructure development. AWS initially entered the Japanese market in 2009 and launched its first cloud region in Tokyo in 2011, followed by another in Osaka in 2021. The launch of Amazon’s Bedrock AI offering in Tokyo in October 2023 and a $100 million investment in a generative AI innovation center in June 2023 underscore the company’s dedication to advancing AI technologies.

The cloud computing market in Japan is poised to experience substantial growth, with a projected increase of USD 13,492.21 million at a Compound Annual Growth Rate (CAGR) of 12.54% from 2022 to 2027, according to a report from Technavio. The competition in the market is expected to intensify due to high storage demands, big data analytics, increased connectivity requirements, and the growing need for technology upgrades, leading to mergers, acquisitions, and partnerships among vendors. AWS faces competition in Japan’s burgeoning AI market, with tech giants like Google and Microsoft also eyeing opportunities.

Google inaugurated its first Japanese data center near Tokyo last year and is taking significant steps in cloud infrastructure development. Microsoft has also been consistently expanding its cloud infrastructure and Azure product availability in Japan, with new data centers launched in western Japan in 2023. All three cloud giants—AWS, Google, and Microsoft—have been chosen as cloud providers for Japan’s Government Cloud platform services, utilized by central and local governments. Prime Minister Fumio Kishida has actively engaged with industry leaders, including OpenAI and Nvidia, highlighting Japan’s commitment to AI regulation and infrastructure development.

In a related development, Kong Inc., a leading developer of cloud API technologies, announced its expansion into the Japanese market in November 2023. Through a joint venture with Japan Cloud, Kong aims to leverage Japan Cloud’s go-to-market expertise to support the growing adoption of its unified cloud API platform, facilitating enterprises in their journey toward becoming API-first companies. This collaborative effort adds to the dynamic landscape of cloud technology in Japan, showcasing the region’s appetite for innovation and technological advancements.

Read next: GenAI driving partnerships in 2024 – now Capgemini and AWS collaborate

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