Japan Natural Language Processing (NLP) Market Size & Share, by Component (Solution, Services); Deployment (On-Premise, Cloud); Organization (SMEs, Large Enterprises); Type (Rule-Based, Statistical, Hybrid); Application (Social Media Sentiment Analysis, Text Summarization, Virtual Agents, Chatbots, Machine Translation) - Global Supply & Demand Analysis, Growth Forecasts, Statistics Report 2023-2031

Japan Natural Language Processing (NLP) Market Definition

Natural language processing (NLP) is the ability of devices to read and understand the human language. It is a specialized part of artificial intelligence techniques that turn all the data fed by humans and produce the desired results. Owing to its text summarization ability, it is also known as text analytics or text mining. Natural language processing has various uses, such as understanding complex conversations on chatbot. Moreover, NLP also increases the effectiveness of other technologies, such as machine learning (ML), deep learning, and cognitive computing. Besides this, these additional technologies enhance the computational capacity, scalability, and affordability of NLP.

Natural language processing establishes the connection between humans and machines through real-time analytics and artificial intelligence. In many sectors such as healthcare, banking and financial services, it helps in improving customer experiences and also helps industries to find solutions for vast unstructured data. Furthermore, in other corporate enterprises, NLP techniques facilitate real-time insight of the company to the managers of the organization. In addition to this, it also identifies and analyzes the fuming topics, and real-time conversations occurring in a workplace.

NLP automates business intelligence and analytics solution for enterprises. Additionally, the add-on features of natural learning processing such as autocomplete and autocorrect features helps in finding the best suggestion for the users. Furthermore, NLP is commonly incorporated into the working of the voice assistants of smart devices, such as Siri, Google, and Alexa. NLP in them helps in interpreting and comprehending human commands.

Japan Natural Language Processing Market: Key Insights

Japan Natural Language Processing Market Size, Forecast, and Trend Highlights Over 2021 - 2031

The Japan natural language processing market is estimated to garner a revenue of USD 10,321.7 million by the end of 2031 by growing at a CAGR of 24.5% over the forecast period, i.e., 2022 – 2031. Further, the market generated a revenue of USD 873.8 million in the year 2021. Natural language processing is a sub-category of artificial intelligence that helps computer systems to understand the ways of human conversations. Therefore, the growth of the market can be attributed to the growing usage of artificial intelligence in the region and the rise in the development of new AI systems. In 2021, the end users in Japan spent almost 2 billion on artificial intelligence systems. Moreover, the expenditure is expected to grow at a rate of 24% and reach to nearly USD 6 million by 2026. In 2020, the Japan Patent Office received more than 5700 applications for patents relating to artificial intelligence (AI).

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In addition to these, factors that are believed to fuel the market growth of Japan’s natural language processing include the government’s rising effort for advancing the use of AI in the region which can boost the development and innovation in the country. For instance, the government presented new strategies for AI in the year 2022. It includes establishing a framework to build and boost the human resources suitable for the AI era, followed by building strategies to develop the research, education, and infrastructure network for artificial intelligence. This initiative resulted in the creation of the "Artificial Intelligence Research and Development Network" and the encouragement of information sharing between member companies. Additionally, NLP also allows various voice assistant devices to understand human speech and commands, therefore, the launch of various voice assistant platforms is further expected to augment the growth of the market. For instance, Kore.ai, a leading AI software provider, launched the enterprise-grade virtual assistant platform. The platform includes various conversational AI technologies, such as NLP, machine learning, NLU, predictive analytics, and deep learning.

Japan Natural Language Processing Market: Growth Drivers and Challenges

Growth Drivers

• Growing Market of AI in Japan– The growing prevalence of technology such as AI, has facilitated the interaction between machines and humans. NLP the branch of artificial intelligence helps machines to understand the human tone of writing and communication. According to the data of Ministry of Economic Affairs and Climate Policy, Japan currently has 200 to 300 AI-related businesses.

• Rising Popularity of Smart Devices– Most of the smart devices have the feature of getting operated by human command, therefore it creates major opportunities for the natural learning processing market. In 2020, around 6 million households in Japan were using smart speakers. In addition, by 2026, the penetration of smart speakers is likely to reach over 15 million households.

• Increasing Government Efforts for Boosting NLP Technology– The government of Japan allotted around USD 19 million for the deployment of the technology that can enhance the analysis of vast data and put it into work for the future.

• Growing Count of Startups for Natural Language Processing – For instance, the Cinnamon Electra, is an NLP model deployed in the transformer library and highly used in Python programming language. Moreover, the AI of Cinnamon has raised a fund of USD 42 million in 9 rounds, additionally, it raised USD 12 million in the recent fundraising round in 202o

• Rising Use of NLP in Healthcare Researches – NLP is highly adopted by the healthcare sector for enhancing the real-time experience of patients and optimizing it according to their needs. For instance, Fronteo Inc. and NTT East Japan collaborated in July 2022 to study the development of digital health after incorporating natural language AI in it.

Challenges

• Lack of skilled engineers- In Japan, there is not much workforce dedicated to AI development. Moreover, by 2030, there is going to be a shortage of around 270,000 engineers for artificial intelligence in Japan. Additionally, by then, the lack of specialized IT personnel in Japan is anticipated to be 13 times worse than it was in 2018. This dearth of engineers and analysts is likely to hamper the market growth.
• Japan is inclined towards hardware, therefore the slow pace of adopting technology is hampering the market growth
• Barriers of phrases, slang, irony, and others in NLP

Market Segmentation

The Japan natural language processing market is segmented and analyzed for demand and supply by end-user industry into education, BFSI, healthcare, IT & telecom, manufacturing, media and entertainment, and others. Out of all end user industries of Japan’s natural language processing, the BFSI segment is estimated to gain the largest market of USD 4,448.6 million at the end of 2031 by growing at a CAGR of 25% over the projected time frame. Moreover, the segment garnered a revenue of USD 360 million in 2021.  The growth of the segment can be attributed to the rise in the number of AI facilities designed exclusively for banking and other financial services. In Japan, there are 24 startups focused on AI in financial services. Furthermore, NLP enhances the customer experience and to automate the vast unstructured data of BFSI sector. The rising number of people creating bank accounts is boosting the segment growth. As of March 2022, around 12 million bank accounts were registered in Rakuten Bank, Ltd., moreover, it was the first digital bank in Japan to exceed the count of 10 million accounts.  

The Japan natural language processing market is also segmented and analyzed for demand and supply by application into social media sentiment analysis, text summarization, virtual agents and chatbots, machine translation, and others. Amongst these five segments, the text summarization segment is expected to garner a revenue of USD 3,106.8 million at the end of 2031 by growing at a CAGR of 24.1% over the forecast period. In addition to this, the market generated a revenue of USD 272.6 million in 2021. NLP helps in simplifying complex text and converting and saving the meaning of the text. Consequently, the demand for AI-based technology in libraries is expected to augment the growth of the segment. The National Diet Library of Japan will use the "CLOVA OCR (Optical Character Recognition)" technology, it is an AI-based technology, which was co-developed by NAVER and its Japanese affiliate LINE. Through this technology, the National Diet Library of Japan is undertaking a project to digitally transform more than 223 million of its around 2 million documents.

Our in-depth analysis of the Japan natural language processing market includes the following segments:

Top Featured Companies Dominating the Japan Natural Language Processing Market

• LINE Corporation
  • Company Overview
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  • Regional Presence
  • SWOT Analysis

• Atilika, Inc.
• Baidu Research
• JSOL Corporation
• IQVIA Inc.
• NTT Media Intelligence Laboratories
• FRONTEO Inc.
• Nvidia Corporation
• 3M
• IBM Corporation
• Nikkei Inc.