Microsoft grows AI presence in Japan, with a possible retreat from China on the horizon

Reports show Microsoft has closed its IoT and AI Insider Lab in Shanghai, China.

Microsoft chairman and CEO, Satya Nadella announced the expansion of cloud infrastructure in Japan following the rapid adoption of Microsoft’s AI stack by Japanese customers across every industry.

Nadella, who was on stage at the Microsoft AI Tour said the tech giant is committed to “accelerating Japan’s AI transformation by empowering businesses across industries with the AI platforms and tools they need to innovate, compete, and thrive in this new era.”

According to a report, as part of the expansion, Microsoft will introduce Azure High Performance Computing capacity, including high-performing GPUs from NVIDIA from mid-April 2025. Microsoft is currently partnering with customers in the manufacturing industry, financial sector as well as in healthcare and government services.

In the IT services industry, Microsoft has also partnered with companies like NTT DATA Corporation and PKSHA Technology Inc. in advancing their AI capabilities.

Microsoft also announced a new program called CyberSmart AI to support the development of skills in AI and cybersecurity. Launched in collaboration with the Japanese government, the program will enable participants to gain skills and techniques in threat intelligence, threat hunting, and analysis of nation state actors.

The free program will also see participants deepen knowledge in how attackers use AI, how security teams leverage AI for threat hunting and incident response as well as AI’s role in enhancing cybersecurity programs.

Pull out from China?

Meanwhile, a report by SCMP, Microsoft has closed its IoT and AI Insider Lab in Shanghai, China. The labs are located in Zhangjiang hi-tech zone and were meant to help with the development of IoT and AI for domestic use cases.

According to the report, the lab had been closed from earlier this year. A visit by the SCMP team showed the lab was dark and unoccupied, with the logo removed and office equipment cleared out.

The closure of the site marks the latest sign of the company’s retreat from China amid rising geopolitical tensions. Last year, Microsoft closed its physical shops in mainland China, leaving sale of its products to partners and online sellers, including its own website.

SCMP also stated that Microsoft did not immediately respond to a request for comment.