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DonFerrari said:

Yes they are considering Japan, but I don't remember the report where I saw it, but they decided to avoid Japan for a decade because the setting was already being used by a high profile game.

https://www.usgamer.net/articles/why-an-assassins-creed-set-in-japan-will-probably-remain-an-impossible-dream-for-fans

In short, Ubisoft avoids Japan, because they think it would be cliche.