More than four out of five Japanese companies report either very limited use of artificial intelligence or no use at all, according to a Reuters poll, a finding that could complicate government efforts to lift productivity through wider AI adoption.
The survey, carried out by Nikkei Research for Reuters between July 29 and August 6, reached out to 510 firms and received 219 responses on condition of anonymity. Respondents reported a range of adoption levels: about 60% said AI is employed only in parts of their business or for a narrow set of tasks, 18% said they have not yet decided whether to introduce AI in the workplace, and 6% indicated they are not considering AI adoption at this time. The remaining 16% said AI is deployed company-wide and forms an integral part of their operations.
Respondents provided color on how that limited adoption looks in practice. One manager at a wholesaler said, "We have started using it company-wide, but its use is limited to tasks such as document creation." A real estate firm official summarized a different barrier: "We don’t know how to put it in use." These comments underscore that, for many companies, deployment remains narrow or experimental rather than transformative.
The poll’s findings align with a government report released earlier in the year that showed Japan trailing other advanced economies in generative AI use. That report found 86.4% of local firms use generative AI for at least one task, compared with 98.1% in China, 91.6% in Germany and 90.9% in the United States.
On planned AI spending for the coming one to two years, companies expressed mostly modest expectations. Four percent expected annual growth of 50% or more in AI budgets, 21% anticipated increases between 10% and 50%, and 30% projected single-digit growth. Fourteen percent said their AI budgets would likely remain largely unchanged, while 31% had not yet decided. No respondents reported plans to cut AI spending.
Investment preferences signaled by the respondents point to a strong tilt toward domestic deployment of capital. When asked about investment destinations, 82% said they favor investing in Japan rather than overseas. This preference broadly reflects the priorities set out in Prime Minister Sanae Takaichi’s growth strategy, which pledges to end what she has called "excessive austerity" and to increase domestic investment, particularly in areas such as AI, semiconductors and quantum technology.
One official at a machinery maker explained the rationale behind the domestic bias: "We already have our major production facilities concentrated in Japan and export products from there. Given the continued weakness of the yen, we see little merit in investing overseas." The official’s comment highlights how currency conditions and existing production footprints are influencing capital allocation decisions.
Not all respondents emphasized Japan as the primary growth opportunity. Some managers among the 18% who prioritize overseas investment said they see stronger expansion potential abroad, citing Japan’s demographic headwinds. On the question of near-term domestic investment plans, 41% of respondents said they will increase domestic investment in the business year ending March 2027 compared with a year earlier, 9% expected a decline, and the remaining 50% plan to keep domestic investment levels unchanged.
The poll’s results point to a corporate sector that is cautious both in how it deploys AI and in how it allocates capital geographically. For many firms, AI remains a targeted tool rather than a company-wide platform, and decisions on expanding AI budgets or shifting investment overseas are still unresolved for a substantial share of respondents.