“Japan is in a moment of change,” Jaime Valles, AWS’ managing director of Asia-Pacific, Japan and China, tells Fortune at the firm’s Singapore office. “AI, security and competition are three strong reasons for Japanese companies to move from a traditional mainframe-based platform to the cloud.”
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Japan’s government has warned that a failure to modernize the country’s IT systems, which it dubs a looming “digital cliff,” could cost the economy as much as $76 billion each year.
The country was once a global pioneer in technological innovation, playing a leading role in the spread of technologies like LEDs, lithium-ion batteries, and notebook computers. But Japan’s corporate culture shifted to reward caution over disruptive innovation, a trend that the World Economic Forum attributes to a cultural aversion to failure and risk.
“The technology posture Japan has today is still very based on traditional, legacy on-premise technology,” Valles says. “Even if you go deep into Japan, most of the support, enablement, applications and technology is run by four local companies: Hitachi, NEC, Fujitsu and NTT Data.”
Yet this conservative mindset has caused Japan to fall behind its peers in reaping the benefits of the AI boom. China has pulled forward in the development of humanoid robots and frontier open-source AI models, while Taiwan and South Korea’s chipmakers have entrenched themselves in global AI hardware supply chains. While Japan lags on manufacturing advanced logic chips, it is still a major manufacturer of legacy and specialized automotive chips, as well as materials and equipment.
Last year, Japan began a push to reboot its innovation engine with a plan to channel $2.3 trillion in public and private investment to 17 strategic sectors by 2040. Semiconductors will get the largest share of the money, receiving $426 billion. Around $66 billion will go to physical AI, a catch-all term that includes robotics and autonomous systems.
“With AI development moving so fast, Japan can’t afford to fall behind,” the country’s digital minister, Hisashi Matsumoto, said during a press briefing last June. “I hope many Japanese people understand that we need to press ahead with AI development, or we’ll end up becoming an AI colony.”
For Valles, that renewed technological push creates an opportunity for cloud providers to drive digital transformation among local companies. “AI allows individuals to make their ideas happen without support from anyone, as long as they have the right data platform, security posture, and reliable systems—all of which we provide,” he says. “With that in place, you’re going to have new ideas from multiple people within companies.”
‘Build something from zero’
Before moving to Asia, Valles spent close to a decade building up AWS’s business in Latin America from a small office in Brazil. “AWS Latin America did not exist,” Valles says. “There was an opportunity to build something from zero, and actually try new ideas.”
Under his leadership, AWS opened several edge locations, or secure connections to the global AWS network, in Argentina, Chile and Colombia. In 2022, the firm also announced plans to open 30 new “AWS Local Zones,” which offer infrastructure, storage and database services.
At the core of his leadership playbook is a commitment to hiring people who are “bigger and better” than him, and being humble enough to let them experiment and innovate.
“The regions are different but at the end of the day, people are people, and culture is culture,” Valles explains. “It’s about bringing on the best leaders, listening to them, and having a mindset that allows you to continuously learn from them.”
‘Land of innovation’
Valles moved to Singapore in 2023 when he was tapped to lead AWS’ operations in the APAC region. He’s bullish on the region, touting it as the “land of innovation”.
“In my view, the future is going to be built and exported from Asia,” Valles tells Fortune. “That’s for multiple reasons, including the region’s diversity, the learning agility of its people, its mix of developing and developed nations, and its continuous drive for innovation.”
AWS is investing in the region, adding four new data center clusters in Malaysia, Thailand, New Zealand, and Taiwan over the last 18 months.
“The decision to invest in each of these regions was driven by customer feedback,” Valles explains. “We’re hearing from local governments and companies that they need computing power to drive innovation in education, health and other domains.” He adds that with more companies moving from AI training to inference, users require cloud regions close by to reduce latencies and delays in operations.
AWS is also rolling out localized initiatives tailored to users in each Asian market. In India, for instance, where software engineering is a core tenet of the economy, AWS has focused its efforts on uplifting developers. Last August, it launched the AI-driven development life cycle (AI-DLC) methodology in Bengaluru to support local developers.
The firm also works to provide adequate enterprise support for local businesses. “We have Japanese language enterprise support to help our Japanese customers in mission critical applications,” Valles says, adding that in Japan, one or two minutes of downtime would “already require an apology from the CEO”.
At the heart of it all, Valles remains an AI optimist. “We’re at such an inflection point in the industry,” he concludes. “I’m totally convinced that AI is going to allow us to build a new future, and completely transform everything that we see.”
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