Japan's tech sector is moving faster than it has in decades. Record salary hikes, a government-backed AI strategy, a semiconductor manufacturing revival, and a widening IT labor shortage are reshaping the landscape — and creating real opportunities for foreign engineers willing to navigate the system.
This article breaks down the eight most significant developments in Japan's IT industry right now, what's driving them, and what they mean in practical terms if you're looking to build a career here.
1. AI Investment Surge
Japan bets big on becoming a global AI hub
Japan's government launched its AI Strategy 2024 with a mandate to fund GPU infrastructure, establish AI research centers, and create a legal framework for responsible AI use. The Ministry of Economy, Trade and Industry (METI) allocated over ¥1 trillion in public funding for AI-related initiatives over three years.
On the private side: SoftBank committed to investing ¥4.5 trillion in the US AI ecosystem and has announced plans to accelerate AI deployments across its Japanese portfolio companies. NTT is building its own large language model (LLM) trained on Japanese data. Toyota launched a dedicated AI research division targeting robotics and autonomous systems.
→ Impact for foreign engineers: AI/ML engineers, LLM fine-tuning specialists, and MLOps engineers are among the most actively recruited profiles in Japan right now — especially those who can work in English.
Which companies are hiring for AI roles?
The clearest demand signal comes from job postings. Companies actively recruiting English-speaking AI engineers in 2026 include:
- Google Japan — DeepMind research collaborations and Search AI
- Amazon Japan — AWS AI/ML services and Alexa Japanese
- Mercari — Recommendation systems, fraud detection
- NTT Data — Enterprise AI, consulting-led AI implementation
- Preferred Networks — Deep learning, industrial robotics AI
- PKSHA Technology — NLP, conversational AI for Japanese enterprises
- Rinna — Japanese-language LLMs and generative AI
Salaries for senior AI/ML engineers at these companies range from ¥10M–18M annually, with top-of-band roles at US-owned companies reaching higher.
2. Semiconductor Revival
TSMC Kumamoto and the Rapidus gamble
Japan's most dramatic industrial move in years: convincing TSMC to build a fabrication plant in熊本 (Kumamoto). The first fab began production in early 2024, manufacturing 12nm and 16nm chips. A second facility is planned and expected to produce more advanced nodes. The Japanese government provided approximately ¥476 billion in subsidies.
Separately, Rapidus — a consortium of Japanese tech giants including Toyota, Sony, NTT, NEC, and Soft Bank — is building a 2nm chip facility in Hokkaido targeting mass production by 2027. The government has committed ¥920 billion to the project. It's ambitious: Japan's chip industry ceded its lead to Taiwan and South Korea decades ago, and catching up to 2nm manufacturing is a steep climb.
→ Impact for foreign engineers: Creates demand for semiconductor process engineers, EDA tool specialists, embedded systems developers, and supply chain engineers — roles that hadn't been prominent in Japan's tech hiring for years.
Beyond chip manufacturing
The semiconductor push has a cascade effect on software too. Automotive-grade embedded systems (especially for ADAS and EV platforms), industrial IoT, and edge computing are all growing as downstream beneficiaries. Engineers with C/C++, RTOS, or hardware description language (HDL/Verilog) experience are seeing fresh demand from companies like Toyota, Denso, Panasonic, and Renesas.
3. Record Salary Increases (Shunto 2025)
Largest wage growth in 30+ years
Japan's annual spring wage negotiations — 春闘 (shunto) — produced their biggest results in over three decades in 2024 and again in 2025. The average wage increase across major companies was approximately 5.1% in 2025, with tech companies often exceeding this.
Notable results: Toyota granted full union demands for the second consecutive year. NTT Group raised base salaries by 7%. Sony, Fujitsu, Hitachi, and major banks all announced increases above 4–5%. Smaller tech companies have had to follow to retain talent in a tight market.
→ Impact for foreign engineers: The tide lifts all boats. Even if you're not at a major company, the labor market competition is pushing all employers to offer more competitive packages. See current IT salary benchmarks.
| Company | 2025 Wage Increase | Type |
|---|---|---|
| Toyota | ~¥28,400/month | Full union demand met |
| NTT Group | +7.0% base | Includes management grades |
| Sony Group | +5.4% base | Global grade harmonization |
| Fujitsu | +5.5% base | Retention-driven |
| Panasonic | +5.0% base | Engineering focus |
| Mercari | Ongoing market-rate adjustments | English-first, global bands |
The underlying driver isn't generosity — it's desperation. Japan's working-age population is shrinking, and the IT sector's demand is growing faster than any domestic pipeline can fill.
4. The IT Labor Shortage Is Getting Worse
800,000 IT workers short by 2030
METI's most-cited projection estimates Japan will be short 800,000 IT professionals by 2030. The gap is structural: the population of people entering the workforce is shrinking while digital transformation (DX) projects are multiplying across every industry — manufacturing, finance, healthcare, retail, logistics.
Japan's universities cannot produce enough engineers. The government's response has been multifaceted: subsidizing coding bootcamps, expanding IT education at high schools, and — critically — relaxing visa pathways for foreign IT workers.
→ Impact for foreign engineers: This is the primary structural tailwind for anyone looking to work in Japan. Companies that previously required N2 or N1 Japanese proficiency are increasingly accepting English-only candidates. Read about IT jobs in Japan without Japanese.
Visa policy changes supporting foreign IT workers
Japan has made several targeted adjustments to attract foreign tech talent:
- J-Skip Visa (2023): A fast-track permanent residency path for highly skilled professionals — compressed to 1 year instead of 5–10 for qualifying candidates with high income and qualifications.
- J-Find Visa (2023): Allows graduates of top global universities to enter Japan to job-hunt without a pre-arranged employer, valid for 2 years.
- Highly Skilled Professional (HSP) visa: Points system remained the main tool, with income thresholds periodically reviewed. See our IT Visa Guide for details.
- Specified Skilled Worker: While originally aimed at manual labor sectors, the government is reviewing expansion to include more IT-adjacent roles.
5. Digital Government Transformation (DX)
Japan's Digital Agency grows its mandate
The デジタル庁 (Digital Agency), established in 2021, has been steadily expanding its scope. In 2024–2025, it accelerated the rollout of the マイナンバーカード (My Number Card) as a universal digital ID — integrating it with health insurance, driving licenses, and government benefit disbursement.
The agency also introduced new IT procurement standards requiring that government systems be cloud-native, API-accessible, and built to interoperability standards — a significant shift from the legacy model of locked-in vendor contracts with large SIers like Fujitsu and NTT Data.
→ Impact for foreign engineers: Creates demand for cloud architects, API/integration engineers, and UX designers specifically in the govtech space. Unlike traditional government IT, the Digital Agency recruits internationally and operates in a startup-like environment.
6. Startup Ecosystem Growth
New unicorns, new capital, new cities
Japan's startup scene has come a long way from the "there are no startups in Japan" narrative of ten years ago. As of 2026, Japan has over 10 unicorn companies (private companies valued above $1B USD), with Preferred Networks, SmartHR, Spiber, and Moneyforward among the more prominent names.
The government's Startup 5-Year Plan — announced in 2022 — targeted ¥10 trillion in startup investment by 2027, and early indicators suggest momentum is building. University spin-outs from Tokyo, Kyoto, and Osaka are increasing. Japan Venture Capital Association reports record investment inflows.
Geographically, while Tokyo dominates, Fukuoka continues to punch above its weight as a startup hub, with Startup Café Fukuoka and city-level immigration fast-tracking for foreign founders. Osaka is seeing growth ahead of the 2025 World Expo spillover effects. Read our city comparison guide.
→ Impact for foreign engineers: Startups are far more likely to hire English-speaking engineers, offer equity/stock options, and operate in modern tech stacks. The downside is lower base salaries vs. large corporations — but the gap is narrowing as startups compete for scarce talent.
7. Remote and Hybrid Work Goes Mainstream
Post-COVID flexibility becoming permanent
Japan's corporate culture was famously resistant to remote work — until the pandemic forced it. The surprise was that it worked. Productivity didn't collapse (in many cases it improved), and large companies like Fujitsu, NEC, and Hitachi announced permanent hybrid or remote-first policies.
By 2026, remote/hybrid work has become a key recruiting differentiator. Engineers openly evaluate companies on their hybrid policies, and companies that mandate 5 days in-office are finding it harder to hire. Smaller companies and startups, which were slower to allow remote in the pre-COVID era, now often lead on flexibility.
That said, nuance matters: "remote-OK" in Japan often means 2–3 days per week in office at minimum, and expectations can shift after onboarding. Full-remote positions for Japan-based employees are still less common than in the US or EU. Read our full work culture guide.
→ Impact for foreign engineers: Hybrid flexibility makes relocation more palatable — you can build a life outside Tokyo while still working for a Tokyo employer. It also creates more "nomadic" opportunities for foreign engineers to work for Japanese companies while initially based abroad.
8. English-First Companies Are Multiplying
More teams operating entirely in English
Ten years ago, a handful of companies operated in English: Rakuten (which made English its official corporate language in 2012), some international firms. Today the list is substantially longer — and growing.
Companies with official English-first or English-OK engineering cultures in 2026 include Mercari, LINE (now LY Corporation), SmartHR, Ubie, Chatwork, Wantedly, ZOZO, Globis, Sansan, and most Japanese subsidiaries of US/EU tech firms. The trend is partly driven by the IT talent shortage — companies that can't find Japanese-speaking engineers are expanding their candidate pool by removing the language requirement.
This does not mean Japanese is irrelevant. In daily life, healthcare, housing, and administrative interactions, Japanese ability makes a significant difference. Read our Japanese for engineers guide for a realistic assessment of how much you actually need.
→ Impact for foreign engineers: The practical barrier to entry is lower than it's ever been. You can realistically build a career in Japan's tech industry with strong English and no Japanese — especially if you target the right companies from the start.
What This Means for You: Practical Takeaways
Putting all eight trends together, here's what the picture looks like for a foreign engineer considering Japan in 2026:
- Timing is good. The labor shortage, salary growth, and visa liberalization are all pointing in the same direction: Japan needs foreign engineers and is adjusting its systems to accommodate them.
- AI skills are premium. If you have ML/AI experience, you're entering one of the most undersupplied talent markets in the world for your profile. This is especially true in Japan, where the domestic AI engineering pool is small relative to corporate demand.
- Target the right companies. The trends above apply most strongly to English-first companies, startups, and foreign-owned firms in Japan. Traditional Japanese corporations still move slowly on language and culture flexibility — they're changing, but it's gradual. Don't apply to SIers expecting a Silicon Valley experience.
- Negotiate from strength. The labor shortage means leverage exists — use it. Research salary benchmarks before accepting offers. See our salary guide.
- Semiconductor is a sleeper opportunity. If you have embedded systems, firmware, or hardware-adjacent skills, Japan's semiconductor push creates demand that most candidates aren't tracking. Less competition, good pay, long-term stability.
- Visa paths have improved but need planning. The J-Skip and HSP tracks are real options, but they require meeting specific criteria. Start with the visa guide before you do anything else.
Frequently Asked Questions
Is Japan's tech industry growing in 2026?
Yes, significantly. Japan is experiencing a convergence of tailwinds: record government investment in AI and semiconductors, the largest salary increases in 30 years driven by labor shortages, a growing startup ecosystem producing new unicorns, and accelerating demand for foreign engineers. For foreign engineers, this represents one of the best entry windows in Japan's modern tech history.
What is Rapidus and why does it matter?
Rapidus is a Japanese semiconductor startup backed by Toyota, Sony, NTT, and the government, targeting mass production of 2nm chips by the late 2020s. Combined with TSMC's Kumamoto fab, Japan's semiconductor investments represent over ¥3 trillion in subsidies and signal its ambition to reclaim relevance in global chip supply chains. For engineers, this creates demand for hardware and embedded systems talent that hadn't been prominent in Japan's hiring for years.
Are Japanese companies raising salaries in 2026?
Yes — 2025 Shunto produced the largest average pay increase in 30+ years: approximately 5–7% at major companies. Toyota, NTT, Sony, Fujitsu all announced increases above 5%. The primary driver is a structural IT labor shortage — companies are competing aggressively for software engineers. This is a favorable trend for foreign engineers targeting Japan.
Do I need Japanese to work in Japan's tech industry in 2026?
Not at English-first companies, which are now much more common than five years ago. Mercari, LINE, SmartHR, Wantedly, Ubie, ZOZO, and most Japanese subsidiaries of US tech firms operate in English. Japanese matters significantly for daily life outside of work, and some technical roles still require it — but a growing number of engineering positions are explicitly English-OK. Read the full breakdown here.