Takaichi’s $640 billion AI gamble faces reality check in a struggling city
In Kitakami, a sleepy city deep in the countryside 500 kilometers north of Tokyo, Japan's AI revolution is unfolding more as a slow burn than a boom.
In the remote Japanese city of Kitakami, located roughly 500 kilometers north of Tokyo, an AI revolution is taking place, but not as expected. The city, which has been struggling with depopulation and economic stagnation, has experienced a steady influx of tech workers from Kioxia Holdings' nearby chipmaking plant, which has helped stabilize its demographic decline.
Kioxia is investing further in the city, planning to spend ¥1.8 trillion ($11.3 billion) on a third chipmaking facility. However, the economic transformation promised by Japan's technology buildout has not materialized as expected. While Kioxia employees and suppliers enjoy comfortable salaries, other residents have seen minimal wage changes, and local businesses struggle to attract talent.
Few of the young tech specialists moving to Kitakami plan to stay permanently, and most local high school graduates continue to leave in search of better-paying jobs elsewhere. This situation highlights a significant challenge facing Prime Minister Sanae Takaichi, who recently unveiled a ¥102 trillion ($640 billion) investment plan to turn Japan into an AI and semiconductor powerhouse.
Despite the government's belief that Takaichi's fiscal largesse will generate substantial economic spillovers, the reality in Kitakami remains uncertain.
Written by urgent.news from Japan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
