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Sharp’s liquid crystal panel factory in Sakai City, which ceased operations last year (site area = approximately 800,000 square meters), has been attracting attention from the IT industry. Sharp announced that it had reached an agreement with SoftBank and KDDI, which are seeking to use the vast factory site and buildings for an artificial intelligence (AI) data center. A major announcement was made about this matter in December, so I will introduce it here.

Basic Agreement Signed with KDDI for AI Data Center Construction

On December 9th, Sharp and KDDI announced that they had signed a basic agreement to construct an AI data center at the Sakai factory site and start operations at an early date.

KDDI aims to start construction of an AI data center by the end of fiscal 2024 and begin full-scale operations by the end of fiscal 2025 by taking over the land, buildings, and power supply equipment at the Sakai factory site.

Sharp will establish a business structure centered on its brand business through asset light measures such as the sale, and will cooperate with KDDI to promptly construct the data center.

Sharp and KDDI aim to contribute to the revitalization of Japan by building a sustainable society through business together with business partners in various industries and sectors through the construction of AI data centers.

Sale of Part of Factory to SoftBank for 100 billion yen

On December 20th, it was announced that part of the land and facilities at the Sakai factory site would be sold to SoftBank.

The sale price is approximately 100 billion yen. SoftBank plans to construct an AI data center, and the total investment, including the procurement of graphics processing units (GPUs) used for data processing, could reach several hundred billion yen.

The data center is scheduled to start construction in fiscal 2025 and begin operation in 2026. The power capacity, which indicates the scale, is expected to be around 150 megawatts, one of the largest in Japan at the start, and will be increased to 250 megawatts at an early stage. GPUs will be purchased from Nvidia, including the next-generation AI semiconductor “B200”.

SoftBank has set a goal of developing data centers in major cities across the country. Sakai will be positioned as a large-scale base in the Kansai area. In addition to being used for the development and operation of its own large language model (LLM), which serves as the foundation for generative AI, it is also considering leasing to external companies.

Sakai Factory Site Trends to Watch in 2025

Sharp aims to shift to a revenue structure centered on “brand business” such as home appliances instead of the liquid crystal panel business. The funds obtained from the sale are expected to be allocated to strengthening the brand business.

There is also information that Sakai Chemical Industry is considering acquiring a part of the Sakai factory site, so there are likely to be more developments in 2025. We will continue to introduce the situation in the future.

Google has been making significant investments in data centers in Japan, with recent announcements of facilities in Inzai, Chiba, Hiroshima, and Wakayama. While the company is expanding its presence in Japan, it has faced increased scrutiny from regulators in the West, along with Japan’s Fair Trade Commission.

Google Accused of Antitrust Violations

Japan’s Fair Trade Commission (FTC) is poised to issue a cease-and-desist order against Google, alleging that the tech giant has violated antitrust laws. The FTC is concerned about Google’s practices related to Android devices, including forcing manufacturers to pre-install Google’s proprietary apps as a condition for licensing the Google Play Store.

The commission has been investigating Google since last October, suspecting that the company has tied the pre-installation of Google Search and Google Chrome to the licensing of the Google Play Store. Additionally, Google is accused of imposing strict requirements on the placement of these app icons on Android devices.

If Android devices were to lose access to the Google Play Store, users would be forced to manually install apps, a process that is inconvenient and time-consuming for most users. As a result, many Android manufacturers have felt compelled to comply with Google’s demands, a practice that the FTC believes may constitute a “tying arrangement” prohibited under antitrust law.

The FTC also suspects that Google has shared ad revenue with device manufacturers on the condition that they do not pre-install competing search apps.

The commission has concluded that Google’s practices, which began at the latest in 2020, likely constitute anticompetitive conduct that has excluded rivals and unfairly restricted the business activities of its trading partners. As a result, the FTC plans to issue a cease-and-desist order.

If the order is issued, it would be the first of its kind against a major U.S. tech company in Japan. However, before making a final decision, the FTC will send a written notice to Google and seek its comments.

Heightened Global Regulatory Scrutiny

Last August, a U.S. court sided with the Department of Justice in its antitrust lawsuit against Google, aiming to dismantle the search giant’s dominant position in the search market. In early September, the Department of Justice also launched an investigation into Nvidia.

Amidst this backdrop of intensifying global regulatory scrutiny of big tech companies, Japan’s Fair Trade Commission is set to issue its first-ever cease-and-desist order against a major U.S. tech firm. This development is being closely watched by industry observers.