Japan's Corporate Capital Expenditure Hits Record High, Led by AI and Factory Investment
Miles Bennett
More than 700 major Japanese companies plan a combined ¥35.67 trillion in capital spending for fiscal 2026, up 14.2% year-on-year — the first double-digit rise in four years. Data centers, chip manufacturing and power infrastructure are the core drivers, signaling that AI demand is now reshaping Japan's real-economy capital cycle.
Where is ¥35 trillion going?
Manufacturing capex plans rose 13% to ¥21.49 trillion; non-manufacturing rose 16.2% to ¥14.18 trillion.
This means → non-manufacturing is outpacing manufacturing. The biggest spenders are not chip fabs themselves but the infrastructure that feeds AI — data centers and the power grid.
A first double-digit increase in four years. This reflects a shift in Japanese corporate sentiment from "wait and see" to "race for capacity."
Who is spending the most?
The single largest spender is telecom operator NTT, with capex up 4.5% to ¥2.43 trillion, driven mainly by data centers.
NTT's data unit alone plans roughly ¥500 billion in data-center investment, up about 30% year-on-year. Its president, Kazuhiko Nakayama, said demand is growing "exponentially."
In plain terms = one company's data-center budget alone rivals the full-year revenue of many mid-cap firms — a measure of how powerfully AI compute demand is pulling telecom capital spending.
Who else rides the data-center build-out?
Flash-memory chipmaker Kioxia is lifting capex 58.6% to ¥450 billion to expand NAND flash capacity — the storage chips that data centers rely on.
Sumitomo Electric Industries will nearly triple capex in its information-and-communications segment, focusing on optical components — the parts that move data inside a data center using light. President Osamu Inoue: "We must expand capacity to meet rising orders."
Hokkaido Electric Power plans a 73.8% capex increase, preparing for surging electricity demand from chipmaker Rapidus while also upgrading nuclear-plant safety.
This means → data-center expansion is not an isolated event. It transmits along the supply chain — chips → optical components → power — pulling capex across an entire industrial chain.
Where is the auto industry spending?
By sector, autos have the largest capex plan at ¥5.76 trillion, up 10.1% year-on-year.
Honda plans ¥1.25 trillion, a 66.4% jump, mainly to accelerate hybrid-vehicle launches after pivoting its EV strategy.
Toyota plans ¥2.3 trillion but is down 3.8% year-on-year. This means → the two giants are diverging: Honda is accelerating its strategic shift while Toyota is moderating its pace.
What about overseas investment and energy security?
Cross-industry overseas capex is forecast to rise 1.4%, recovering from a dip in fiscal 2025 caused by U.S. tariff pressures.
Furukawa Electric plans to more than triple capex to expand data-center component capacity in Southeast Asia. Nippon Steel sees combined domestic and overseas investment up 51.7% to a record ¥1.43 trillion, partly to upgrade facilities at its U.S. Steel subsidiary.
On the energy-security front, oil-and-gas producer Inpex plans to expand capacity in Southeast Asia and Australia, while top refiner ENEOS Holdings is channeling funds into maintaining and upgrading aging domestic refineries.
Put simply = overseas capex grew only 1.4%, but the composition shifted — money moved from "tariff hedging" toward "securing AI supply-chain nodes" and "energy security." The direction matters more than the headline number.
Can this capex wave be sustained?
Whether Japanese companies can deliver on these plans hinges on two variables: the pace of AI demand growth and the trajectory of the global trade environment.
This means → if AI compute demand slows or trade friction intensifies, current plans could be trimmed. If both hold, this capex cycle still has room to run higher.
This reflects a broad corporate bet on an AI-driven capacity-expansion window — the stakes are large, but the risks are real.
Content is for reference only, not financial advice.