Kawasaki Heavy Industries Ltd.

Movements to form corporate alliances across different industries are gathering pace, centered on physical AI, in which robots and automobiles move autonomously through artificial intelligence. Five companies including the herbal medicine maker Tsumura and the machinery trading firm Yamazen have recently opened a data collection center for physical AI in Narashino City, Chiba Prefecture, where up to 40 robots will repeatedly perform tasks to train robots capable of acting autonomously. Kawasaki Heavy Industries, Fanuc, and Yaskawa Electric, Japan's three major robot makers, are partnering with Fujitsu and the American company Nvidia, while about 20 companies including Kyocera, Kobe Steel, and the software developer Alm are pooling data and expertise with the aim of automating the processing techniques of skilled engineers. Noetra, in which 44 companies including SoftBank and NEC participate, is independently developing an AI foundation model that will serve as the brain of physical AI, aiming for practical application in fiscal 2030, and the government has decided to provide more than 380 billion yen in support for the project this fiscal year.

The Japanese government is considering raising its medium-term defence budget share to 3.5% of gross domestic product, or GDP, in line with the targets of NATO and other U.S. allies. One option under consideration is to set a target in line with South Korea's pledge to raise defence spending to 3.5% of GDP within 10 years, while a lower target of around 3% also remains possible. Prime Minister Sanae Takaichi has already accelerated defence spending to nearly 2% of GDP in the fiscal year that ended in March, two years ahead of the original schedule, up from an informal cap of around 1% of GDP before 2022. A new five-year defence spending plan is expected to be announced late this year. After the report, Japanese defence stocks, led by IHI Corp and Kawasaki Heavy Industries, reversed course in afternoon trading on the Japanese stock market, closing up 1.82% and 0.89% respectively. Japanese government bonds fell, pushing the yield on 10-year government debt to its highest level since 1996, while the yen weakened to 154.91 yen to the dollar. Analysts at Iwai Cosmo Securities said the market is worried about the fiscal position, as reflected in the bond market reaction, and that it is hard for investors to view this news positively.

Japan's Ministry of Land, Infrastructure, Transport and Tourism announced on the 11th that, as the second round of measures to revive the domestic shipbuilding industry, it has decided to provide up to 98 billion yen in support for capital investment plans by five companies: Oshima Shipbuilding, Kawasaki Heavy Industries, Shin Kurushima Dockyard, Naikai Zosen, and Mitsubishi Shipbuilding. The aid will be disbursed through a 350 billion yen shipbuilding industry revival fund. The subsidies come to about 6.1 billion yen for Oshima Shipbuilding, about 15.6 billion yen for Kawasaki Heavy Industries, about 32 billion yen for the Shin Kurushima Dockyard group, about 4.3 billion yen for Naikai Zosen, and about 40 billion yen for Mitsubishi Shipbuilding. Combined with the first round of three projects, including support already decided for Imabari Shipbuilding, public and private investment over the next ten years will reach roughly 900 billion yen, of which up to about 311 billion yen will be provided as support.

EdgeCortix Inc. and Kawasaki Heavy Industries have signed a multi-year Teaming Agreement to advance next-generation AI-enabled aerial defense systems, with an initial program value of several million U.S. dollars across 2026 to 2028. The collaboration combines Kawasaki's aerospace and defense expertise with EdgeCortix's chiplet-based AI computing platform and MERA software to enhance the intelligence, adaptability, and energy efficiency of future mission systems. The companies will jointly conduct technology development, feasibility studies, system integration, and prototype development, with plans to expand scope as milestones are achieved. EdgeCortix CEO Dr. Sakyasingha Dasgupta called the agreement a significant commercial and strategic milestone, noting the need for substantial AI computing within tight power and thermal constraints in next-generation aerial defense platforms.

Nvidia has signed seven Japanese industrial giants into its new physical AI coalition, locking in a massive, long-lived stream of demand for its chips and software. Companies including Fujitsu, FANUC, Yaskawa Electric, Kawasaki Heavy Industries, Hitachi, NEC, SoftBank, Sony, and Kubota intend to build on Nvidia's Cosmos, Isaac, Metropolis, and Jetson platforms as part of a Cosmos Coalition focused on physical AI. Nvidia is also partnering with Noetra, a Japanese AI consortium backed by Sony, SoftBank, Honda, and dozens of other firms, to build what it calls the world's first national infrastructure for physical AI, centered on a Vera Rubin AI factory with 13,750 Vera CPUs and 27,500 Rubin GPUs delivering about 140 megawatts of compute capacity. Japan's industry ministry expects this to help the country capture 30% of the global AI robotics market by 2040, and Prime Minister Sanae Takaichi's government plans to mobilize more than 370 trillion yen, or 2.3 trillion dollars, in combined public and private investment by 2040 across physical AI, semiconductors, and data centers. Noetra's own roadmap calls for roughly 1 trillion yen, or 6.3 billion dollars, of sovereign AI spending over five years to develop domestic foundation models for robots and industrial AI.

Kawasaki Heavy Industries reported a sharp rise in first-quarter profit and raised its fiscal 2027 earnings guidance while keeping its revenue forecast unchanged. Profit attributable to owners of the parent climbed to 15.66 billion yen from 4.24 billion yen a year earlier, with business profit jumping to 35.75 billion yen from 20.51 billion yen. Revenue increased to 543.58 billion yen from 488.44 billion yen. For the fiscal year ending March 2027, the company now expects business profit of 180 billion yen, up from a prior forecast of 170 billion yen, and profit attributable to owners of 115 billion yen, up from 110 billion yen, while maintaining its revenue outlook of 2.56 trillion yen.

Nvidia and Kawasaki Heavy Industries have agreed to co-develop AI-powered robotics for shipbuilding in Japan. The partners plan to build a next-generation digital shipyard that uses robotics, AI and simulation technologies. The collaboration extends Nvidia's AI platform into industrial robotics and shipbuilding applications. Kawasaki contributes shipyard expertise and robotics know-how, while Nvidia provides GPUs, AI software, and simulation tools for tasks such as welding, painting, inspection, and material handling. The move adds an industrial automation angle to Nvidia's business, though it also introduces execution and partnership risk depending on Kawasaki's ability to integrate and deploy the technology effectively.

Nvidia is collaborating with leading Japanese robotics companies FANUC, Yaskawa Electric, and Kawasaki Heavy Industries, along with Fujitsu, to develop AI solutions for robots and industrial systems using Nvidia platforms such as Cosmos, Isaac, Metropolis, and Jetson. Additionally, other companies like Hitachi, Kubota, NEC, Sony, and SoftBank Corp. are set to join the NVIDIA Cosmos Coalition to develop real-world AI models. Meanwhile, Noetra, backed by the Japanese government with Sony as an investor, plans to purchase 27,500 NVIDIA Rubin GPUs to build physical AI infrastructure, with construction expected to start in April 2027 and operations to begin in 2028. Analysts view this partnership as a positive factor reflecting Nvidia's market expansion from AI data centers to physical AI and robotics. While it may not significantly impact short-term revenue, it creates a new long-term AI market.

Nvidia CEO Jensen Huang unveiled a broad slate of AI products, partnerships, and customer deployments at the company's Japan AI event in Tokyo on July 15. The announcements spanned physical AI, healthcare, financial services, quantum computing, automotive, manufacturing, and gaming, highlighting Nvidia's push to position its technologies at the forefront of Japan's next-generation AI infrastructure. In physical AI and robotics, Nvidia launched Cosmos 3 Edge for on-device vision reasoning, and companies including FANUC, Fujitsu, Hitachi, Kawasaki Heavy Industries, Kubota, NEC, SoftBank, Sony Group, and Yaskawa Electric plan to join the Nvidia Cosmos Coalition to develop open physical AI models. In healthcare, Astellas Pharma, Eisai, Daiichi Sankyo, Ono Pharmaceutical, and Takeda Pharmaceutical are deploying Nvidia BioNeMo for AI-powered drug discovery, while Canon and Fujifilm introduced Nvidia-powered next-generation CT systems, and Kawasaki Heavy Industries is advancing AI-enabled surgical and hospital robots. In financial services, Mizuho Financial plans Japan's largest on-premises AI factory for banking, Sumitomo Mitsui Financial has deployed an AI factory through Japan Research Institute, and Rakuten Bank is developing AI transaction foundation models using Nvidia Agent Toolkit. Huang emphasized that the next wave of AI will be physical AI—robots, factories, vehicles, and industrial systems that can perceive, reason, and act in the real world—and said Japan's leadership in robotics, manufacturing, and precision engineering positions it to play a leading role in this transition.

Fujitsu announced it has begun exploring business opportunities in the physical AI field together with Fanuc, Yaskawa Electric, and Kawasaki Heavy Industries. By incorporating NVIDIA technology, the companies aim to build a sovereign AI foundation that bridges the digital and physical worlds.

US semiconductor giant Nvidia announced on the 16th, coinciding with CEO Jensen Huang's visit to Japan, a series of expanded partnerships with Japanese companies including Fujitsu and Toyota Motor. With Fujitsu, it will jointly explore commercialization in areas such as factories, retail, and logistics, together with Fanuc, Yaskawa Electric, and Kawasaki Heavy Industries. It will provide technical cooperation for Toyota Motor's Woven City test course, and collaborate with Hitachi on realizing a system that integrates and controls entire sites such as factories and power plants. These initiatives will promote the social implementation of physical AI, which can be utilized for robot operations and other applications.

JERA has signed time charter agreements with Mitsui OSK Lines and NYK Group for four fuel ammonia tankers, marking what the company calls the world's first long-term deployment of VLGC-size carriers for ammonia transportation. Under the deals, MOL and NYK will each provide two vessels to support the Blue Point Project in Louisiana, a $4 billion ammonia production facility with a nameplate capacity of 1.4 million metric tons per year that is targeted to start production in 2029. The ammonia will be used at JERA's Hekinan Thermal Power Station in Japan to enable commercial-scale ammonia co-firing with a 20 percent heat value ratio. The MOL carriers, to be built by Kawasaki Heavy Industries, are scheduled for delivery in the first half of 2027.