Takaichi’s $640 billion AI gamble faces reality check in a struggling city

Japan's AI-driven economic revival plan, championed by Prime Minister Sanae Takaichi with a $640 billion investment target, is facing a reality check in Kitakami, a rural city 500 kilometers north of Tokyo, where the impact of Kioxia Holdings' chipmaking plant has been gradual rather than transformative. The city's downtown shows signs of life from Kioxia workers, but the broader struggle with depopulation and economic stagnation persists, highlighting the challenges of translating AI infrastructure into widespread regional growth.

In Kitakami, a sleepy city deep in the countryside 500 kilometers north of Tokyo, Japan’s AI revolution is unfolding more as a slow burn than a boom. On a humid Friday evening in July, the city’s downtown hummed with activity as tech workers from Kioxia Holdings’ nearby chipmaking plant let off steam in bars and karaoke clubs. A few streets over, taxis crawled along the gravel of a road that’s being repaved to improve access to the factory after it opened a new production facility last year. For Kitakami’s residents, these are welcome signs of progress in a city that, like much of rural Japan, has been grappling with depopulation and economic stagnation for decades. A steady inflow of Kioxia employees has helped stall its demographic decline, and Kitakami now boasts one of the youngest populations of any municipality in Iwate prefecture.