Japan, once a global leader in consumer electronics and industrial products, has struggled to keep pace with the rapid advancements in artificial intelligence (AI) and the semiconductor revolution. In the late 1980s, Japan commanded over half of the global semiconductor market, but its share has since declined sharply to just 10 per cent.
Japanese firms continued to bet on DRAM (Dynamic Random Access Memory) production which became increasingly less profitable over time. Its competitors meanwhile diversified into more advanced and lucrative segments like microprocessors, which became crucial components in personal computers and other digital devices.
This decline can be attributed to several factors, including complacency, prolonged trade friction with the United States, delays in adopting advanced production technologies, an aging workforce and corporate leadership, and sluggish investment in emerging technologies. Over time, competitors such as the United States, China, Taiwan, and South Korea have surged ahead, leaving Japan trailing in this critical sector.
To regain its competitive edge, Japan has launched an ambitious $65 billion investment initiative aimed at revitalising its semiconductor industry and advancing its AI capabilities. This strategic vision has opened new avenues for partnership between India and Japan.
During a visit to India in July 2023, Japan’s Minister for Economy, Trade, and Industry (METI) Nishimura and India’s Minister for Electronics and Information Technology Ashwini Vaishnaw signed a memorandum of cooperation to strengthen collaboration in semiconductor design, manufacturing, equipment research, talent development, and supply chain resilience. This partnership is set to unfold at both government-to-government (G2G) and business-to-business (B2B) levels.
