Japan's Defense Revolution: AI, Drones, and Missiles Take Center Stage

Japan is embarking on a significant transformation of its defense strategies, with plans to integrate advanced technologies such as drones, artificial intelligence (AI), and new methods of warfare. This strategic pivot is reflected in an 8.9 trillion yen ($55.6 billion) budget request for the coming fiscal year, as disclosed by the Defense Ministry. While this preliminary sum represents a slight increase from the current fiscal year's 8.8 trillion yen ($55 billion) defense budget, it is anticipated to grow substantially upon Prime Minister Sanae Takaichi’s government approving a new security and defense strategy aimed at bolstering Japan’s counterstrike capability.

This renewed focus aligns with Japan's five-year defense strategy, established in 2022, which committed to doubling defense spending to approximately 2% of its gross domestic product. The objective is to enhance the Self-Defense Forces’ offensive role, particularly in response to China’s increasing assertiveness in the region, a buildup that Beijing has criticized as “new militarism.” The ministry emphasizes that Japan seeks to “drastically strengthen its deterrence and response capability by transforming its defense capability,” drawing lessons from contemporary conflicts, such as Ukraine’s deployment of drones.

A core component of this evolving strategy is the extensive adoption of uncrewed weapons and long-range strike capabilities. Japan intends to utilize attack drones in conjunction with long-range cruise missiles for more cost-effective counterstrikes. The Defense Ministry is requesting funding for the acquisition of unmanned attack drones capable of launching from both above and under water, with plans for the fiscal year beginning in April 2027. The strategy highlights the necessity for domestic development and mass-production of low-cost uncrewed weapons, aiming to reduce costs, minimize casualties, and establish a more efficient air defense network. These uncrewed systems are also seen as a crucial solution to compensate for a declining number of military personnel, a challenge posed by Japan's aging and shrinking population. Furthermore, to augment its counterstrike capabilities, the ministry is pursuing the development of hypersonic missiles that can be launched from submarines, building upon recent fortifications of its southwestern region with longer-range missiles and interceptors. However, developing fully homemade drones presents a challenge, given that Japan’s commercial drone market is largely dominated by imports from China.

Artificial intelligence is set to play a pivotal role in enhancing Japan’s defense command and control systems. The ministry plans to introduce an integrated AI platform to improve the speed and accuracy of decision-making, including battlefield assessment and target selection. Japan is exploring various approaches, including leveraging existing foreign AI technologies, particularly from the U.S., while also fostering and strengthening domestically developed AI, or a combination of both. A key initiative is the development of a next-generation platform dubbed “AI orchestrator,” designed to integrate and autonomously manage multiple AI systems. Additionally, the ministry aims to establish a “Defense Ministry cloud” for secure transmission of highly sensitive data and to ensure stable communication networks during emergencies or disasters, though specific costs for these measures were not detailed.

To support this ambitious defense overhaul, the government plans to strengthen the domestic defense industry. Recognizing that stable and sustainable defense equipment production is crucial for deterrence, the ministry has requested funding for a state-owned, contractor-operated system. This system would ensure consistent defense equipment production and supplies by having the government acquire factories and outsource manufacturing to private firms, thereby mitigating risks of shortages caused by supplier withdrawals. The budget request also includes provisions to support defense-related research and development by companies and assist with restructuring efforts aimed at improving production efficiency. While major suppliers like Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and IHI Corp. have seen increased profits amidst Japan's military buildup and expanded arms exports, the industry as a whole has faced challenges. Decades of poor profits, an uncertain business outlook, and reputational concerns regarding arms manufacturing have led dozens of companies to withdraw, exacerbated by constitutional limits on the use of force strictly for self-defense.