LOGO

A major milestone is approaching for SoftBank’s ongoing development of AI infrastructure. With the international submarine cable connecting Tomakomai and Itoshima scheduled to open in 2028, the push to strengthen Japan’s digital foundation is in full swing. Following Tomakomai, plans for an AI-ready data center (DC) are also advancing in Asahikawa, creating a robust network that balances regional decentralization with international connectivity. This latest move also visibly demonstrates the results of SoftBank’s long-term AI strategy.

Connecting Tomakomai Directly to the World

SoftBank’s “Core Brain DC” in Tomakomai is positioned as a central hub for the AI-powered society it envisions. Further bolstering its strengths will be the international submarine cable, set to begin operations in 2028. A direct connection from Tomakomai to North America and Asia will create an environment where the vast amounts of data needed for AI training and inference can be rapidly exchanged with the world. This will be a key factor in significantly boosting the international competitiveness of Japan’s domestic AI infrastructure.

Furthermore, a cable from Itoshima in Kyushu is also scheduled to open in the second half of 2028, forming a strong communication network linking the two hubs of Hokkaido and Kyushu. This will allow for the dispersal of disaster risk, a reduction in communication latency, and the stable securing of international lines, thereby increasing the overall reliability of Japan’s data communication foundation. For AI companies both at home and abroad, a high-performance data processing environment based in Japan will become an attractive option.

Asahikawa DC Adds Depth to Decentralization Strategy

The new DC planned for Asahikawa will complement the international connectivity functions of Tomakomai. Located inland, Asahikawa is notable for its low tsunami risk, making it a disaster-resilient location. While Tomakomai will handle large-scale training, the concept is for Asahikawa to handle inference and regional data processing, aiming for greater efficiency through role-sharing. Moreover, by utilizing renewable energy from Hokkaido, the DC’s value as an environmentally conscious “green DC” will also increase. This will evolve SoftBank’s DC network from being mere data processing facilities into a next-generation infrastructure that combines sustainability and safety.

The opening of the submarine cable linking Tomakomai and Itoshima is a significant step that will usher in a new phase for Japan’s data foundation. By combining this with a decentralized strategy that includes Asahikawa, SoftBank will steadily forge the future of Japan’s AI infrastructure, strengthening its competitiveness both domestically and internationally. This cable opening is expected to further draw attention to Japan as a hub for the global AI industry.

For a long time, Inzai City in Chiba Prefecture has been a prime location for data centers in the Tokyo metropolitan area. With ample land and easy access to the city center, it has attracted numerous major operators. However, in recent years, significant power supply constraints have emerged, posing a major challenge for new developments. The current mayor’s lack of a proactive stance on attracting data centers has also made it difficult for Inzai to maintain its position as the top choice. Consequently, the industry is now searching for the “next Inzai.”

Sagamihara’s Proactive Strategy

Sagamihara City in Kanagawa Prefecture is gaining traction as a strong contender. The city’s Hashimoto area has been attracting attention due to the upcoming Linear Chuo Shinkansen Line, and it has a successful track record of attracting data centers in the past. The city government is actively promoting new developments, as highlighted in a recent regular city council meeting in June 2025. In response to a representative’s question, the city emphasized that a “stable power supply system is essential for data center development.” It also revealed that it is working with Tokyo Electric Power Company (TEPCO) Power Grid to discuss improvements to high-voltage receiving facilities and reinforcement of supply routes. The city is also exploring the potential for renewable energy, signaling its commitment to building sustainable urban infrastructure.

The “A and A District” of Asaodai and Shino, considered a top candidate site, has a significant advantage in its proximity to Tokyo, despite the constraints of being near the Atsugi Air Base. With major players like Goodman, a logistics facility developer, reportedly showing interest, market attention is on the rise.

Power Supply and Future Outlook

Even with these efforts, it remains to be seen whether Sagamihara can secure a sufficient power surplus. After the previous data center development in the Hashimoto area, power shortages became an issue, which will likely make operators cautious. However, the city’s early engagement with power companies and its emphasis on renewable energy are positive signs for long-term stability.

The rapid expansion of data centers in Japan, driven by the growth of generative AI and cloud services, is reaching a turning point as Inzai’s capacity wanes. The growing interest in Sagamihara reflects this shift in the industrial landscape. Sagamihara’s ability to establish itself as the “next Inzai” will ultimately depend on how successfully it can develop its power supply and surrounding infrastructure.

NTT’s push to implement IOWN (Innovative Optical and Wireless Network), its next-generation infrastructure concept, is gaining momentum. In June 2025, NTT announced the successful completion of a proof-of-concept for the All-Photonics Network (APN), a core component of the IOWN vision. This new optical network technology can achieve communication that surpasses the limits of the existing internet, offering ultra-low latency, massive capacity, and significantly reduced power consumption.

This latest experiment dramatically improved energy efficiency while curbing communication delays to less than 1/200th of conventional levels. This represents a critical technological breakthrough for social infrastructures that demand advanced real-time processing, such as AI, autonomous driving, and remote medical care. NTT aims for full-scale implementation by 2030, with social integration expected to accelerate through collaborations with businesses, local governments, and research institutions.

Synergies with IOWN in Data Center Strategy

Alongside IOWN’s implementation, NTT is ramping up investment in its data center business. NTT Data and NTT Communications are expanding their footprint by building new, large-scale data centers and expanding existing ones, both domestically and internationally. These new facilities are expected to incorporate IOWN technologies.

Of particular note is the integration of APN with “Digital Twin Computing (DTC)”, which combines APN with computing resources. DTC is a technology that replicates all information from the physical world into a virtual space in real time, leveraging it for future predictions and optimization. This makes it highly compatible with data centers, which require vast amounts of data processing. Through the construction of next-generation data centers that support these advanced technologies, NTT aims to achieve both energy efficiency and high computational performance.

Moreover, IOWN-compatible infrastructure isn’t just for domestic deployment; it’s also set for global expansion. NTT is actively entering overseas markets, including Asia, Europe, and North America, to build digital foundations on a global scale. With bases already established in the United States, India, and Europe, NTT has begun operating IOWN-compatible data centers. It’s clear that this next-generation technology, originating from Japan, will have a significant impact on the global digital ecosystem.

A “Made in Japan” Infrastructure Revolution Spreading Worldwide

NTT’s ambitious IOWN concept isn’t just about network renovation; it has the potential to transform the very structure of society. A high-speed, low-latency, and energy-efficient communication infrastructure is indispensable across all domains: AI, quantum computing, remote operations, and smart cities. The fusion of IOWN and the data centers that support it brings us a step closer to realizing the next-generation digital society.

NTT’s challenge is now moving beyond the technical verification phase into implementation and deployment. There are high expectations for a future where cutting-edge technology from Japan spreads as a global digital infrastructure.

In recent years, “decentralization” has garnered significant attention within the data center (DC) industry. The Japanese government and Tokyo Electric Power Company are promoting initiatives like “Watt-Bit collaboration,” which links power and data communication, to encourage the shift of data centers away from urban concentrations. The underlying objectives include mitigating earthquake and disaster risks and revitalizing regional economies. However, the reality on the ground diverges somewhat from this ideal.

The Barrier of Hyperscaler Economic Rationality

The biggest obstacle is the behavior of foreign hyperscalers. The current demand for data centers is primarily driven by major overseas cloud providers such as Google and Amazon. Their location decisions are based primarily on economic rationality, and they strongly believe that there are significant advantages to establishing operations in areas where data centers and communication networks are already concentrated. Consequently, they are reluctant to decentralize.

Furthermore, supporting Watt-Bit collaboration requires robust internet infrastructure, including Internet Exchange (IX) points and submarine cable landing stations.

As one government official stated, “Decentralization won’t progress if we rely solely on economic rationality.” This indicates that a strategy extending beyond mere infrastructure development is needed for successful regional dispersal.

Government Strategy and Support for Domestic Operators are Key

Japanese data center operators are relatively more proactive in establishing DCs in regional areas. Japanese companies often demonstrate a willingness to expand into various regions, considering their social mission and the characteristics of the domestic market. However, even if they establish regional data centers utilizing subsidies and grants, sustained business operations are impossible without securing enough customers to cover ongoing running costs. Since major overseas cloud providers do not use regional data centers, it is extremely difficult for Japanese data center operators to decide to build new DCs in the regions.

Given this situation, the key to future progress lies in “government leadership” and “strengthened support for Japanese operators.” Market principles, left solely to economic rationality, will not lead to decentralization.

Instead, the government may need to strategically designate locations and actively guide development with a strong resolve. Additionally, effective institutional design is essential, going beyond one-off subsidies to include long-term operational support and tax incentives. The government’s large-scale utilization of regional data centers could also be an effective measure.

The question remains: Is the government prepared to push forward with decentralization, even if it means transcending economic logic? And how will Japanese companies respond to this trend? The regional strategy surrounding data centers is now reaching a critical juncture.

The Japanese government is now clearly emphasizing the importance of “Watt-Bit Collaboration”—the fusion of energy and digital technologies. The 2024 Basic Policy on Economic and Fiscal Management and Reform has positioned this collaboration as a core strategy, aiming to create a framework that simultaneously solves regional challenges and drives economic growth by integrally utilizing watts (electric power) and bits (digital data).

A key technology expected to drive this initiative is the next-generation decentralized ICT infrastructure known as IOWN (Innovative Optical and Wireless Network). By leveraging its decentralized and autonomous network architecture, IOWN enhances processing capabilities at the network’s edge. This structure allows for the distribution of massive power consumption and data processing to regional areas, rather than concentrating them in a few urban data centers. This capability makes it possible to overcome the limitations of over-concentration in metropolitan areas and establish a robust digital infrastructure in local communities.

The “Watt-Bit” Concept: A Vision That Thrives in Regional Japan

At its core, the Watt-Bit Collaboration is a vision designed for regional Japan, not a policy meant for metropolitan hubs like Tokyo and Osaka. This energy-x-digital approach is most effective when applied to the unique challenges plaguing rural areas, such as population decline and aging infrastructure. Today, advances in network technology—including fiber optics, 5G/Local 5G, and even satellite internet—have significantly overcome geographical disadvantages. An environment capable of handling advanced digital processing is rapidly taking shape in regional Japan.

From a power supply perspective, distributed data processing facilities also offer advantages to utility companies by providing greater flexibility for managing supply and demand and integrating renewable energy sources. In particular, a “locally-produced, locally-consumed digital infrastructure” that runs on renewable energy like solar and wind can enhance disaster preparedness and boost the overall resilience of local municipalities.

Will Big Tech Get on Board? The Next Challenge for Decentralized Infrastructure

However, this vision is not without its challenges. It remains uncertain whether global IT giants like GAFAM, which handle vast amounts of data, will embrace a decentralized regional infrastructure model. Their decisions will hinge on multiple factors, including the reliability, security, and cost-effectiveness of distributed edge computing and smaller-scale facilities. The ability to build an operational model that satisfies these global players will be the key to the nationwide success of the Watt-Bit Collaboration.

Moving forward, the initiative will require more than just national-level policy design and support. It calls for a diverse range of players—including local governments, private companies, power utilities, and telecommunication carriers—to work together to create a sustainable and practical model. The Watt-Bit Collaboration is not merely a technological endeavor; it is a national project that will define the very future of Japan’s regional communities.

Tokyo Electric Power Company Power Grid (TEPCO PG) has established TEPCO Digital Infrastructure Co., Ltd. to advance its digital infrastructure business. This move comes against a backdrop of an explosion in data demand and the redefinition of power infrastructure driven by the widespread adoption of advanced digital technologies like generative AI. Power companies are no longer just energy suppliers; they’re evolving into crucial partners underpinning our data-driven society.

A prime example of this evolution is the joint data center development in the Inzai-Shiroi area of Chiba Prefecture by NTT Data Group, NTT Global Data Centers, and TEPCO PG. Announced in late 2023, this plan involves establishing a Special Purpose Company (SPC) within fiscal year 2023, with services aiming to launch in the latter half of 2026. The initial phase will see the construction of a large-scale data center with 50 MW of power capacity for IT equipment, with further joint developments progressively being considered, primarily in the Tokyo metropolitan area.

The Fusion of Power Company Expertise and ICT Company Technology

The significance of this project lies in the synergy between TEPCO PG’s extensive asset base and power operation expertise, and the NTT Group’s advanced ICT technologies and global data center operational capabilities. Together, they aim to build a more sophisticated and sustainable data center model. This design philosophy, particularly its ability to address societal challenges like decarbonization and distributed power sources, points toward the future direction of next-generation infrastructure.

Similar initiatives are emerging from other power companies. Tohoku Electric Power, for instance, has launched a new business for generative AI using containerized mobile data centers. A key feature of this initiative is its speed-to-market approach, enabling GPU-equipped servers to be operational within a few months. Spearheaded by ideas from younger and mid-career employees, this project leverages the cool climate of the Tohoku region for efficient power consumption and also lays the groundwork for attracting large-scale data centers in the future.

“Electricity’s” Growing Presence as the Foundation of the Data Society

Underlying these developments is a structural shift in electricity demand. With the establishment and expansion of data centers and semiconductor factories, peak electricity demand is projected to reach 7.15 million kilowatts by 2034. This makes redesigning Japan’s electricity supply system an urgent priority. Addressing challenges such as stable supply, renewable energy integration, and securing baseload power simultaneously necessitates an integrated approach between electricity and digital infrastructure.

As power companies become deeply involved in digital infrastructure, data centers and electricity have become inextricably linked. High-density, always-on digital foundations demand vast and stable power supplies. Conversely, for power companies, data centers represent the most realistic growth driver as they seek decarbonization and new revenue streams.

In essence, power companies and data center operators are now transcending the traditional supplier-user relationship, transforming into partners jointly building the social infrastructure. To envision a future that balances both stable supply and sustainability, it is absolutely essential for both parties to team up and tackle these challenges together.

The trend towards increasingly large-scale data centers (DCs) is gaining serious traction, highlighted by Tsukuba’s first hyperscale data center project, which drew significant attention during its bidding phase. This initiative is spearheaded by Australia’s Goodman Group. In 2022, the company successfully acquired approximately 45 hectares of land in response to a public call for proposals conducted by Tsukuba City as part of its industrial promotion strategy. This region, developed as a “Science City,” already possesses well-established infrastructure, including telecommunications, power, and water, along with excellent accessibility from the Tokyo metropolitan area. Furthermore, it offers significant potential for further development, making it one of the few locations in Japan equipped to host hyperscale data centers.

The Full Scope of the 1GW Hyperscale DC Development

In January 2024, Goodman formally announced the “Goodman Tsukuba Data Center Campus.” The vision is for a campus-style data center envisioned to have a maximum power capacity of up to 1GW (1000MW) – a scale unprecedented in Japan. The first phase, a 50MW facility, is currently under construction and slated for completion in 2026. Notably, preliminary agreements with key anchor tenants are already in place, highlighting its alignment with current market demand. Goodman also operates a data center cluster exceeding 300MW in Inzai City, Chiba, and Tsukuba is set to become its next flagship location.

Next-Generation Infrastructure Driven by Global Strategy and Environmental Commitment

Goodman’s data center strategy is global, with developments also underway in other key global cities such as Hong Kong, Los Angeles, Sydney, and Melbourne. In February 2025, Goodman announced it had secured approximately USD 4 billion (around JPY 600 billion) for data center development. The company is projecting up to USD 80 billion in development opportunities over the next 5 to 7 years and has already secured a total power capacity of 4GW.

The company is also at the forefront of environmental sustainability. Through low-carbon building design and the proactive integration of renewable energy, Goodman is strengthening its adherence to ESG (Environmental, Social, and Governance) criteria. This is a significant draw for global cloud providers and AI operators that prioritize sustainability.

A Project Redefining Japan’s Role in the Mega Data Center Era

Thus, the 1GW-class data center development in Tsukuba stands as a landmark project, heralding a new phase for Japan’s domestic data center industry. This plan, achieved through a collaboration between public and private sectors, not only enhances the value of the region but is also garnering considerable attention as an initiative poised to redefine Japan’s standing in the age of mega data centers.

Large factories once supporting Japan’s rapid economic growth, such as steelworks and electronics manufacturers, are now successively transforming into data centers (DCs) in response to the demands of the digital age. A prominent example drawing attention is the DC project in Kawasaki City by Mitsubishi Corporation and JFE Holdings.

Former Manufacturing Bases Evolve into the Heart of the AI Era

The two companies are moving forward with a plan to invest 100 to 150 billion yen to construct a large-scale data center on the site of the JFE Steel East Japan Works Keihin District (Kawasaki coastal area), where blast furnace operations ceased in 2023. A feasibility study is slated for completion by fiscal year 2025, with operations scheduled to begin as early as fiscal year 2030. If realized, it will be the largest DC operated by the Mitsubishi Corporation Group, with an anticipated power consumption of 60,000 to 90,000 kilowatts.

This plan reflects a symbolic paradigm shift from manufacturing to information industries. The Kawasaki steelworks was a crucial base that supported Japan’s steel industry for approximately 90 years, dating back to the Japan Steel Tube era. However, intense global competition led to the cessation of blast furnace operations. Now, this very site is set to transform into a state-of-the-art information infrastructure that meets the demands of AI and cloud computing.

In particular, the widespread adoption of generative AI has rapidly increased the need for infrastructure capable of high-speed processing of large volumes of data. Demand for servers using high-performance semiconductors from US-based Nvidia is also rising, prompting companies to seek new DC locations. Former factory sites, with their expansive land and robust power infrastructure, offer ideal conditions to meet these requirements.

Sakai, Kawasaki, and Across Japan: Redefining Former Factory Sites

Similar movements are becoming evident in other regions. In Sakai City, Osaka Prefecture, the Sakai Factory, known for Sharp’s LCD panel manufacturing, is undergoing a transformation plan to become a DC under the hands of major telecommunications companies SoftBank and KDDI. What was once a “monozukuri (manufacturing) hub” is now poised to evolve into an “information processing hub.”

According to forecasts by research firm Fuji Keizai, Japan’s domestic DC market is expected to reach 5,403.6 billion yen in 2029, a 34% increase compared to 2024. Consequently, not only traditional office buildings and suburban facilities, but also industrial zones in urban peripheries are gaining attention as DC locations.

The repurposing of industrial land is a topic that concerns not only real estate development but also energy policy and regional revitalization. Data centers, in particular, consume massive amounts of electricity, making the introduction of renewable energy and the establishment of local production and consumption power supply systems key for the future.

Factory complexes that once drove the Japanese economy are once again in the spotlight as foundational infrastructure for the digital society. From heavy industries to information industries—the demands of the times and technological evolution are fundamentally reshaping urban landscapes and land values.

The “Stargate Project,” a large-scale AI infrastructure development initiative spearheaded by SoftBank Group and OpenAI, is focusing on Sakai City as the central location for its expansion in Japan. Specifically, SoftBank plans to repurpose a former liquid crystal display panel factory owned by Sharp in Sakai. The company has acquired a portion of this facility for approximately 100 billion yen with the goal of transforming it into a cutting-edge AI data center.

This facility will be the third major site for the project, following an existing base in Tokyo and another under construction in Hokkaido. It boasts an impressive power capacity of 150 megawatts, making it one of the largest in Japan. Operations are slated to begin in 2026, with plans to expand capacity to 250 megawatts in the future. Sakai’s favorable location and infrastructure conditions are expected to ensure the long-term stability of the data center’s operations.

SB OpenAI Japan to Drive Domestic AI Development and Adoption

At the heart of this project is “SB OpenAI Japan,” a joint venture established in February 2025 by SoftBank and OpenAI. This company aims to develop large language models (LLMs) specifically tailored for the Japanese language and provide “Crystal Intelligence,” a generative AI service for businesses.

The Sakai data center is planned to host the operation of AI agents powered by GPUs, utilizing the foundational models provided by OpenAI. These agents will be specialized for various corporate functions, such as human resources and marketing, with the aim of delivering customized AI solutions that meet specific business needs.

These efforts have the potential to significantly accelerate the digital transformation of Japanese companies.

Creating the Future Through Massive Investment and Industrial Fusion

SoftBank is planning a large-scale development that will require 100,000 GPUs for this AI infrastructure build-out, potentially amounting to a massive investment approaching one trillion yen based on simple calculations. The GPUs are expected to be supplied by U.S.-based NVIDIA and the Stargate Project itself.

SoftBank President Miyakawa stated, “We aim to make Sakai a hub for the fusion of AI and existing industries, serving as an experimental ground for new business models and solutions to challenges.” This highlights the expectation that the facility will not just be a data center, but a key driver in the evolution of the AI industry both domestically and internationally.

Furthermore, this initiative is poised to be a crucial step in enhancing productivity across various industries and addressing labor shortages.

In March 2025, U.S.-based NVIDIA held its annual developer conference, “GTC,” and announced its new software “Dynamo,” specifically designed for inference processing. This announcement comes against the backdrop of a significant shift in AI’s evolution, moving from a primary focus on “learning” to “inference.”

NVIDIA, a company that has historically excelled in technologies for training AI models, emphasized that its hardware and software are now essential for inference as well. CEO Jensen Huang stressed that accelerating inference processing is key to determining the quality of AI services.

Key Features of the New “Dynamo” Software

Dynamo will be available as open-source software and is designed to accelerate inference processing by efficiently coordinating multiple GPUs. When combined with the latest “Blackwell” GPU architecture, it can reportedly increase the processing speed of the “R1” AI model from the Chinese AI company DeepSeek by up to 30 times compared to previous methods.

A core feature is a technique called “fine-grained serving,” which significantly improves processing efficiency by separating the inference process into two phases: “prefill” and “decode,” and assigning them to different GPUs.

Furthermore, by leveraging a technology called “KV cache” to store and reuse past token information, Dynamo reduces computational load. The “KV Cache Manager” integrated into Dynamo enables efficient cache management to avoid exceeding GPU memory limits.

The Trade-off Problem and Hardware Evolution

In his keynote speech, CEO Huang highlighted the trade-off between “total tokens per second (throughput)” and “tokens per user (latency)” in inference. This illustrates the dilemma where faster response times can limit the number of concurrent users, while supporting more users can lead to increased response delays.

To address this, NVIDIA has adopted a strategy of overcoming this trade-off through hardware enhancements. The newly announced “Blackwell” architecture boasts up to 25 times the processing power of its predecessor, “Hopper,” enabling a balance between quality and scale.

Continued Strong Investment in AI-Related Data Centers

As the primary use case of AI shifts towards inference, the demand for computational processing is experiencing exponential growth. Following “Blackwell,” NVIDIA has unveiled development plans for even higher-performance GPUs, such as “Rubin” and “Feynman,” with Dynamo evolving as the corresponding software foundation.

To support such high-density and high-performance AI processing, distributed and large-scale computing environments are essential. Consequently, with the expansion of AI agents and generative AI, investment in data centers as the underlying infrastructure is expected to remain robust in the future.