We recently hosted a webinar covering the key opportunities in Japan for U.S. defense and resilience technology exporters. Japan is undergoing the most significant transformation of its defense posture since the Second World War – and for U.S. companies with the right technologies, the timing has never been better to enter this market.
Our in-market expert, Richard Lyle, covered where Japan is investing, which technologies are in demand, and how foreign companies can realistically access these opportunities.
You can catch the recording of the webinar here, or read on for a writeup of the session.
A nation rearming
For decades, Japan has maintained a strict pacifist defense policy, with its military operating as "Self-Defense Forces." But this era is ending. Driven by intensifying regional threats from North Korea, China, and Russia, and growing uncertainty about the reliability of allied support, Japan is signalling a pivot from this era of pacifism.
Key markers of this shift include:
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Defense spending doubling to 2% of GDP by 2027, one of the largest single expansions in Japan's modern history. It’s 2025 budget was US$ 55.1 billion.
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A new Prime Minister, Sanae Takaichi, who placed defense at the top of her agenda from day one.
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The passing of the Active Cyber Defense Law in April 2025, enabling Japan to take pre-emptive action against cyber threats for the first time.
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And, perhaps most importantly, Japan can now export defense products, ending decades of self-imposed restrictions and opening new global avenues for Japanese primes and their supply chain partners.
These markers point to a strategy underpinned by three main goals. Reinforcing the national capabilities and architecture, strengthening US-Japan alliances and promoting security collaborations with like-minded countries. One high-profile example is the team-up of UK, Japan and Italy to build a 6th-generation fighter plane through GCAP.
Public opinion is shifting too. While a pacifist movement remains, the prevailing mood, particularly among younger Japanese, is that Japan must step up and secure itself in an increasingly tense region.
Where the money is going
1. Autonomous Systems & Unmanned Defense
Japan's aging and declining population means fewer people available for military roles. Autonomous systems are seen as the answer. Unmanned defense is one of seven official priority capabilities in Japan's Defense Buildup Programme, which has a budget of US$6.3 billion allocated for FY2023-2027. Areas of focus include ship-launched Unmanned Aerial Vehicles (UAVs), smaller satellite UAVs, Unmanned Service Vehicles (USVs), and AI-powered combat support drones. Recent collaborations include Boeing Japan securing an ATLA contract, and Shield AI being selected by the Japan Maritime Self-Defense Force (JMSDF) as a ship-borne Intelligence, Surveillance and Reconnaissance (ISR) platform.
2. Cybersecurity & Digital Defense
US$ 6.9 billion is earmarked for cybersecurity measures over five years, with $1.83 billion deployed in 2025 alone. Japan is scaling its Cyber Defense Command to 4,000 personnel and aims to nearly quadruple the size of its domestic cyber sector over the next decade. But this is faced with the challenge of a significant shortage of domestic engineers. Foreign companies with proven capabilities in operational technology security, critical infrastructure protection, and quantum-resilient systems are particularly well-positioned.
3. AI & Quantum Technologies
A US$ 145 billion economic package announced by Prime Minister Takaichi specifically targets AI, quantum computing, semiconductors, and space as pillars of Japan's future sovereignty. Measures include a quantum test bed set to be established in Tokyo, and a new Defense Innovation Technology Institute has been launched. These are long-term structural investments, so early movers in this sector will have the advantage.
4. C4ISR & Satellite Communications
Japan is pursuing multi-domain operations across land, sea, space, and cyber, with interoperability with U.S. forces as a stated priority. In 2025, US$ 850 million was allocated for communications satellites, including the Kirameki-3, which launched November 2024. Primes like Anduril Industries have announced a new Tokyo office and begun integration trials with the JMSDF, focussing on sensor fusion and command-and-control enhancements. Space defense guidelines have been issued, and the SPECSA Japan expo is now an annual fixture on the sector calendar.
5. Integrated Air & Missile Defense
With North Korea regularly launching missiles over Japanese airspace, this is an acute and immediate priority. Japan and the U.S. are already making strides in this area. The U.S. State Department approved $3.46 billion in Raytheon missile sales to Japan. The US$ 2.35 billion purchase of 400 Tomahawk missiles and 50 JASSM-ER A-launched missiles marks a distinct break in Japan’s defensive posture. For the first time, it has the ability to strike targets beyond its own borders. Japan looks to innovate here, too. The Glide Phase Interceptor (GPI) project being co-developed between the U.S. Missile Defense Agency and Japan’s Ministry of Defense. Japan will provide the rocket motors and propulsion hardware, with U.S. software being the brains of the new missile. Half-billion dollars was committed in 2025 for radar integration and live fire trials.
A note on dual-use opportunities
Many of the technologies in highest demand – like cyber, AI, quantum, and space tech – are inherently dual-use. Companies that may not consider themselves "defense" businesses could find substantial interest from Japanese prime contractors and trading companies looking for capabilities that serve both civilian and military applications.
Routes to market
There are three realistic pathways for foreign companies:
1. Local subsidiary
Full control, but significant investment – plan for at least US$1 million in setup costs before any revenue. This route suits larger organisations that have already proven demand through a Japanese partner and are ready to scale independently.
2. Trading company partnership
The most common and practical entry point, especially for smaller or newer-to-market companies. Japanese trading houses hold established relationships with Japan’s Ministry of Defense, its Acquisition, Technology & Logistics Agency, and the major primes. Your job is to secure the right partner; theirs is to open the doors. This method, however, requires significant time and effort invested into relationship-building and managing multiple stages of commercial and technical discussions.
3. Selling into Japanese OEMs / prime contractors
Companies such as Mitsubishi Heavy Industries, Kawasaki, Fujitsu, and Mitsubishi Electric are actively seeking foreign technology for integration into their own systems. Given that Japanese companies can now export defense technology, a technology sold into a Japanese prime could ultimately reach markets beyond Japan, including back to the United States. Those taking this route should keep in mind they will have to do extensive homework on regulations and learn to operate deeply within local business protocols.
Which path you choose depends not just on your product and your maturity as a technology provider, but also on how well you understand the Japanese industry’s inner workings and which levers to pull.
Navigating the Japanese market
Japan rewards commitment and penalises half-measures. Here’s an initial checklist:
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Show up fully prepared. Research your counterparts before every meeting. Japan has a long memory, and a poor first impression is hard to recover from.
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Japanese companies have strong domestic options. Your technology needs to offer something genuinely differentiated to displace a local incumbent.
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Japan's corporate year runs April–March. Approaching a potential partner in May means the earliest realistic deal window is the following year.
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Japanese companies deliberate carefully before signing. But once signed, they execute quickly and without ambiguity.
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The most common failure mode for foreign companies in Japan is selecting the wrong local partner. Choose yours carefully.
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A small company with a strong, finished product can win in Japan. An underdeveloped product, regardless of company size, will struggle.
Key Organisations
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Japan’s Ministry of Defense (MOD). It holds overall policy and procurement authority, and hosts growing innovation offices proactively seeking overseas collaboration.
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ATLA (Acquisition, Technology & Logistics Agency). Responsible for R&D and procurement of new systems and equipment.
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METI (Ministry of Economy, Trade and Industry). Manages licensing, regulation, and dual-use technology oversight.
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JAXA. Japan's space agency, relevant to satellite and space technology opportunities.
The Bottom Line
Japan is spending seriously, moving urgently, and actively seeking foreign partners across autonomous systems, cyber, AI, quantum, C4ISR, and missile defense. The U.S.-Japan alliance provides a strong foundation, but the market is open to companies from all allied nations with the right technologies.
If you get things right in Japan, it can be a lucrative market with stable relationships and long-term revenues – possibly with global export prospects.
To discuss your prospects in Japan’s defense and resilience markets, you can contact Richard Lyle at Richard.lyle@intralinkgroup.com
