TOKYO—Takashi Chikayama is a true hacker—a person who spends long hours working to crack difficult software codes, not because he’s paid overtime, but because he loves programming. Unlike most members of his scientific cadre however, he doesn’t work in a basement university lab in Cambridge, Mass., or a plush office in Silicon Valley. Chikayama’s home is Tokyo—and he is Japan’s newest and quite possibly most potent weapon in the international battle to control the lucrative high technology market for computer software.

Japan’s rising supremacy in the realm of hardware is not news. Today, companies like NEC and Hitachi, rather than Motorola and Texas Instruments, have the most sophisticated microchip fabrication facilities. Fujitsu has produced the fastest supercomputer. And this past December, Japan’s Institute for New Generation Computer Technology (ICOT) announced the latest coup: parity with the West in the area of parallel processors, the machines needed to run the artificial...

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