Wow, where to start.
Basically, ignore anything in the previous answer regarding Europe and shields.
As far European metallurgy goes, pattern welding was in use as early as the 2nd and 3rd centuries. The technique continued to be used up until about the end of the viking era (mid 11th century) when quenching and tempering basically took over.
As a general rule, shields got smaller as armour got better and became more common. Far from being a secondary defence in melee, shields are not clumsy and are excellent for both attack and defense. As I said, they fell out of use in Europe because improvements in body armour made them superfluous. NOT because your off-hand can be put to better use. Unless you are extremely well trained, using two swords is simply an invitation for a humiliating death. I think it's important to note that the wakizashi was a back up sword, used for close quarters/indoor fighting and beheading defeated opponents.
But getting back to the question (finally), shields were used in ancient Japan but fell out of favour. I think the main reason for this was the predilection of Japanese warriors for two handed weapons, most notably the spear and bow. Both of these are important battlefield weapons, for obvious reasons, and were the preferred weapons of samurai.
So basically, two handed spears and bows were hugely popular in Japan and hand held shields aren't particularly useful for archers and spearmen.