Japan and India team up to cut china's semiconductor grip

2025-08-29 general

tokyo, Friday, 29 August 2025.
Japan and India are joining forces with the “Japan-India Economic Security Initiative.” The goal is to create a semiconductor supply chain independent of China. Prime Ministers Ishiba and Modi met for 1.5 hours to launch this framework. Japan aims to invest 10 trillion yen in India. They want to increase personnel exchanges to over 500,000 in five years. This initiative aims to bolster economic ties and address supply chain vulnerabilities.

Semiconductor self-sufficiency

This initiative has significant implications for investors. Reducing reliance on China for semiconductors aims to stabilize supply chains [1]. Geopolitical tensions and potential disruptions have made investors wary [GPT]. A Japan-India alliance offers a buffer against these risks [1]. Companies involved in semiconductor manufacturing, materials, and equipment stand to benefit [3]. This includes firms like Tokyo Electron, which is set to launch a manufacturing equipment development center in India in September [3].

Economic security initiative

The “Economic Security Initiative” focuses on semiconductors, key minerals, pharmaceuticals, and information and communication [1]. This broad scope signals long-term strategic importance. India’s Ambassador to Japan, George, emphasized the importance of cooperation in semiconductors and AI [4]. He noted India’s significant investments in the semiconductor sector and the complementary relationship between the two nations [4]. Modi also plans to visit a semiconductor manufacturing equipment factory in Miyagi Prefecture with Prime Minister Ishiba [4].

Bilateral trade and investment

The partnership extends beyond semiconductors. Both countries aim to boost cooperation in AI development and infrastructure projects [2][4]. India’s large and growing market presents opportunities for Japanese companies [4]. Ambassador George aims to increase the number of Japanese companies operating in India from 1,500 to 15,000 [4]. This suggests a substantial potential for increased trade and investment flows. The leaders agreed to cooperate on introducing the new Shinkansen “E10 series” for India’s high-speed railway [2].

Geopolitical implications

The joint statement expressed concerns about the East and South China Seas [1]. Both leaders voiced strong opposition to changing the status quo by force or coercion [1][2]. This shared stance strengthens the strategic partnership. It also signals a united front against potential Chinese aggression. Investors should monitor geopolitical developments. These events can significantly impact market sentiment and supply chain dynamics [GPT].

Market outlook

The Japan-India partnership presents a compelling alternative to China-centric supply chains. Sectors like batteries, robotics, shipbuilding, and nuclear energy could see increased collaboration [7][8]. Keidanren Chairman Yoshinobu Tsutsui views Modi’s visit as vital for maintaining a free and open international economic order [7][8]. Investors should watch for policy changes and investment trends. These factors will indicate the long-term success and impact of this initiative [6].

Bronnen

semiconductor supply chain japan-india relations