"Until recently Japan was at the technological leading edge. In the most important current technology revolution – artificial intelligence – Japan has become a developing country," Son said at an annual SoftBank event for suppliers and customers.
While SoftBank's $100 billion Saudi-backed Vision Fund has poured tens of billions of dollars into bets on late-stage tech startups around the world, it has overlooked Japan in favour of countries such as the United States, China and India.
"Unfortunately there are virtually no companies that can be called global No. 1 unicorns," Son said of Japan, referring to startups reaching $1 billion valuations.
Son asked the assembled corporate attendees in Tokyo to raise their hands if their companies have employed 1,000 AI engineers, with none doing so.
With a limited pool of IT engineers in Japan, particularly when English language skills are required, tech firms investing in AI like SoftBank rival Rakuten Inc and flea market app operator Mercari Inc have been looking overseas with India a recruitment focus.
Rakuten, which will begin mobile services in October - putting it in direct competition with SoftBank's domestic telco, SoftBank Corp - plans to double the number of IT engineers in Bengaluru over the next year from 550 currently.
Innovation in artificial intelligence has become how Son defines the Vision Fund's investment thesis, whose bets on 82 companies span sectors including ride-hailing, fintech and healthcare.
"Japan needs to wake up to this new reality and catch up," he said.
Underscoring the contrast with his home country, where technology innovation remains dominated by long-established companies, Son brought on stage self-made entrepreneurs from SoftBank portfolio companies.
Speakers included Ritesh Agarwal, 25-year-old founder of Indian hotel chain OYO, and Vijay Shekhar Sharma, the founder of payment app Paytm parent One97 Communications.
Many of these companies are expanding beyond their original remits, with Paytm, which has grown rapidly by offering QR code payments, moving into insurance and credit, and Southeast Asian ride-hailing app Grab offering payments and food delivery.
While SoftBank has served as a gateway into Japan for some of its portfolio companies, its ability to help drive synergies between them is yet to be demonstrated, with this week's conference bringing some of the founders together in Tokyo.
(Reporting by Sam Nussey; Editing by Christopher Cushing)
By Sam Nussey