Japan Wants an AI Orchestrator and Underwater Attack Drones. Its Drone Market Runs on Chinese Imports.

Tokyo's record 8.9 trillion yen request buys AI command-and-control, underwater attack drones and government-owned weapons factories, but the domestic drone industry it assumes does not exist yet.

Japan's Defense Ministry disclosed a record 8.9 trillion yen ($55.6 billion) budget request for fiscal 2027 on Monday. Kyodo News put the precise figure at 8.89 trillion yen.

That is only slightly above the 8.8 trillion yen sought for the current year. Officials expect it to rise once Prime Minister Sanae Takaichi's government revises Japan's three national security documents by year-end.

This is the final request under the five-year, 43 trillion yen plan adopted in 2022, which doubled defense spending to about 2% of gross domestic product and expanded the Self-Defense Forces' offensive role against China's growing assertiveness. Beijing has called the buildup "new militarism."

The request rests on three pillars: new ways of warfare using AI and drones, sustained operations in a prolonged conflict, and a stronger industrial base, The Japan Times reported.

The ministry seeks unspecified funding for attack drones launched from the air or from underwater, to be paired with long-range missiles for cheaper counterstrikes. It also wants submarine-launched hypersonic missiles. Its plan calls for domestic mass production of low-cost uncrewed weapons to cut costs, reduce casualties and build a less expensive air defense network, citing Ukraine's use of drones.

An integrated AI platform would assess battlefields and select targets to speed command decisions. A proposed "AI orchestrator" would tie multiple AI systems together and manage their autonomous selection and operation. Officials are weighing American technology, domestic development or both. A defense ministry cloud would carry sensitive data.

The industrial request covers a state-owned, contractor-operated production system: the government buys the factories and outsources manufacturing to private firms. Profits at Mitsubishi Heavy Industries, Kawasaki Heavy Industries and IHI Corp. have risen as Japan rearms, but dozens of companies have left the sector over decades over weak profits and reputational concerns.

That gap constrains the drone plan. Experts say Chinese imports dominate Japan's commercial drone market, which makes fully homemade systems hard to build. Uncrewed weapons could also offset a shrinking pool of personnel as the population ages. Tokyo revises the three security documents by year-end, and the ministry expects the figure to rise then.