Core Viewpoint - The article discusses the current state of the Japanese AI industry, highlighting the challenges faced by companies like Preferred Networks in achieving internationalization and the tendency towards a closed-loop system within Japan, which limits global competitiveness [3][6][36]. Group 1: Characteristics of AI Companies - True AI companies possess self-developed models and frameworks, while false AI companies primarily enhance information efficiency without genuine AI capabilities [5]. - Preferred Networks is identified as a true AI company due to its strong technology and product versatility across various industries [5][10]. Group 2: Preferred Networks Overview - Preferred Networks was established in 2014 and developed the deep learning framework Chainer, which initially garnered high expectations within the industry [7]. - The company has a strong patent portfolio with 435 patents globally, indicating its technological strength [9]. - Despite its capabilities, Preferred Networks has shifted towards a more localized approach, focusing on serving major Japanese corporations rather than pursuing international expansion [12][13]. Group 3: Financial Performance of PKSHA Technology - PKSHA Technology, founded in 2012, has shown strong profitability, with revenues increasing from 15 billion yen in 2018 to 169 billion yen in 2024 [21]. - The company has a diverse client base across various sectors, including retail and finance, indicating its robust market presence [21][22]. Group 4: Role of Major Corporations and Government - Major Japanese corporations like NEC and NTT have established AI departments primarily serving government and B2B sectors, contributing to a self-sufficient ecosystem [31][32]. - The Japanese government plays a significant role in AI development through organizations like NEDO, which focuses on funding technology research but often overlooks the growth of individual companies [25][26]. Group 5: Cultural and Structural Challenges - The Japanese AI industry is characterized by a conservative culture that limits open sharing of technology and collaboration, impacting innovation [11][23]. - The reliance on corporate venture capital (CVC) rather than traditional venture capital (VC) restricts the growth potential of startups, as they remain tied to the interests of large corporations [38].