Japan and India Plan to Shift Mature Chip, LCD and Battery Production to Strengthen Supply Chains

A Manufacturing Shift Built Around Everyday Technology

Japan and India are advancing plans to move production of mature semiconductor chips, liquid crystal displays and batteries from Japan to India, seeking to keep essential manufacturing competitive while reducing dependence on China. As of August 28, 2025, the initiative is set to be unveiled during Indian Prime Minister Narendra Modi's visit to Japan for a summit with Japanese Prime Minister Shigeru Ishiba.

The Japan External Trade Organization (JETRO) and the Confederation of Indian Industry developed the plan. Its focus is on established manufacturing technologies that Japanese producers are struggling to sustain against competition from cheaper Chinese products. Solar power equipment, compressors and other industrial components are also within its scope.

The proposed shift connects two national priorities. Japan wants to preserve commercially viable production and secure access to important components. India wants to build a larger electronics manufacturing industry and reduce its reliance on imported parts, particularly those coming from China.

The chips involved are different from the advanced processors associated with artificial intelligence and the latest smartphones. Mature semiconductors perform essential jobs in electric vehicles, appliances and industrial machines. Moving their production can affect the supply of everyday products even when the technology attracts less attention than the newest chips.

Japan's approach also gives it room to concentrate domestic resources on advanced semiconductor development while keeping older manufacturing technologies within supply chains shared with partners. India gains an opportunity to combine Japanese production knowledge with its workforce, engineering talent and government incentives.

The initiative remains a plan under development, alongside individual company projects. A full timetable for transferring production, the number of factories involved and the identities of some participating businesses have not been specified.

Why Older Chips Still Matter

Legacy semiconductors are chips made using mature, established manufacturing processes. The word legacy describes the production technology, while the chips themselves continue to serve current needs across transport, household appliances and industry.

Electric vehicles use these components in voltage control systems. Energy efficient appliances rely on them in inverters, which help manage electrical power. Industrial equipment also needs such chips to carry out essential operating functions. For these uses, dependable performance and affordable production are central concerns.

Advanced chips made with processes described as 2 nanometers receive much of the attention around smartphones and artificial intelligence. Mature chips serve a different part of the market. A factory producing them can support businesses that need reliable components without requiring the newest manufacturing process.

Japan and India are therefore targeting a broad manufacturing need, rather than trying to reproduce the most advanced chip industry immediately. India's focus on mature production fits demand from automotive, telecommunications and consumer electronics businesses, where cost and reliability are especially important.

The plan extends that reasoning beyond chips. LCD screens, batteries, solar equipment and compressors are all products or components that support larger manufacturing industries. Maintaining several kinds of production gives the partnership a wider purpose than a single semiconductor investment.

Japan's Strengths and the Pressure From China

Japan held about 50 percent of the global semiconductor market in the 1980s. Its position weakened amid export restrictions imposed by the United States, price competition from China and the growth of specialized chipmakers in Taiwan and South Korea.

Japanese businesses still have major strengths in semiconductor materials, chemicals and manufacturing equipment. These are essential parts of chip production, even when the finished chips are manufactured elsewhere. Japan also remains competitive in NAND memory, power semiconductors, microcontrollers and CMOS image sensors.

NAND memory stores data, microcontrollers handle control functions within devices, and CMOS image sensors capture images. Japan has largely exited the DRAM market, another major branch of the memory chip industry. Its remaining strengths show that the country's role is substantial but concentrated in particular technologies and production inputs.

Chinese manufacturers present a difficult challenge in the mass production of mature chips and other established products because of their lower prices. The proposed move to India aims to help Japanese companies continue making goods whose production capacity is declining at home.

India's workforce and cost advantages are central to that calculation. Japanese companies would bring manufacturing experience, while Indian partners would help provide a production base where established technologies could remain commercially viable. The economic security aim is to keep critical capacity from becoming concentrated entirely under Chinese control.

What Companies Are Preparing to Move

The JETRO and Confederation of Indian Industry plan covers several manufacturing activities facing strong competition from inexpensive Chinese goods. Its scope includes:

• Semiconductors made with mature manufacturing processes.
• Liquid crystal displays, commonly known as LCDs.
• Solar power equipment.
• Storage batteries.
• Compressors and other industrial components.

A Japanese storage battery manufacturer is set to sign a memorandum of understanding with an Indian partner. Such a memorandum records the parties' intended cooperation. The battery project is one example of companies preparing to act on the wider manufacturing initiative.

A Japanese electrical machinery maker is also building a compressor plant in Tamil Nadu. That project connects the broader policy discussion to a specific Indian manufacturing location and a product beyond semiconductors.

These projects are described as technically and financially straightforward, making them attractive to Japanese businesses seeking to remain viable under pressure from Chinese competition. Established production methods can offer a practical starting point for cooperation between companies in the two countries.

The partnership's reach across several products matters for India. Electronics manufacturing depends on more than the assembly of finished devices. Access to chips, displays, batteries and industrial components can support a wider base of domestic production.

India's Incentives and Factory Ambitions

India's electronics industry has long depended on imported semiconductor components, particularly from China. Modi's Make in India initiative, launched in 2014, seeks to turn the country into a global manufacturing hub. The proposed partnership with Japan fits that effort by bringing established production capabilities into India.

The Indian government has committed nearly INR 629 billion out of an earmarked INR 650 billion to semiconductor production incentives. The support is intended for domestic and foreign investors, giving companies financial reasons to establish manufacturing operations in the country.

Tata Electronics, Foxconn, HCL, Micron Technology and other companies are investing in new fabrication and assembly plants across India. Fabrication is the stage at which semiconductor chips are manufactured. Assembly prepares chips for use in finished products, forming another necessary part of the production chain.

India is also modernizing existing infrastructure, including the Semiconductor Laboratory in Mohali. Building new factories and upgrading an existing facility are complementary parts of the effort to expand domestic capabilities.

The first domestically produced chips are expected by the end of 2025. That expectation gives the manufacturing drive a near term milestone, while the larger goal of developing a broad semiconductor industry will take longer.

India's semiconductor market is projected to reach $63 billion by 2026. The forecast helps explain the interest in building production close to a growing market, alongside the government's effort to reduce dependence on imported components.

Protecting Technology and Developing Skills

India is preparing legislation modeled on Japan's controls to prevent technology leakage and protect intellectual property. These protections are a central part of the proposed transfer because Japanese companies would be sharing valuable manufacturing knowledge.

Intellectual property includes the protected ideas, designs and technical knowledge behind a product or manufacturing process. Technology leakage occurs when that knowledge reaches people or businesses without authorization. For a company moving production abroad, protecting its methods is part of protecting the investment itself.

The intended Indian measures would safeguard transferred technologies against unauthorized use or export. This is especially relevant to semiconductor technologies that can serve both civilian and military purposes. The controls are intended to reassure Japanese firms and their government that production knowledge will remain secure.

The memorandum between Japan and India covers semiconductor design, equipment research and talent development as well as manufacturing. The partnership therefore reaches beyond the physical transfer of production lines.

India's strength in chip design is considered a major asset. Japanese experience with manufacturing infrastructure can support the development of a domestic industry that connects design work with production, equipment and the preparation of chips for use.

Bosch, Renesas and Powerchip Semiconductor Manufacturing Corporation are already involved in collaborations strengthening India's capabilities in chip design, advanced packaging and manufacturing. Packaging is the stage that prepares and connects chips for use within electronic products.

The government's Design-Linked Incentive Scheme supports startups and research, including work on 2D materials for next generation chips. Alongside factory investment, this support addresses the design and research activities needed to build a broader semiconductor industry.

Economic Security Shapes the Partnership

The COVID-19 pandemic and the technology rivalry between the United States and China exposed the risks of relying heavily on concentrated supply chains. When production is clustered in a limited number of places, disruption there can affect manufacturers and customers far beyond those locations.

The United States, Japan and their allies have since made more resilient and diversified technology supply chains a priority. Semiconductors have become a focus of both national security and economic policy because so many industries depend on them.

India belongs to the Quadrilateral Security Dialogue, or QUAD, alongside the United States, Japan and Australia. Its role in that grouping and its position in the Indo-Pacific help explain why Japan views it as a partner in securing semiconductor supply chains.

The manufacturing plan also strengthens Japan's relationship with India and offers an alternative to closer alignment with China. That diplomatic dimension comes as India manages complex trading relationships, including new United States tariffs on Indian goods.

Japan and India are linking economic cooperation with supply security. Companies need production that remains affordable, while governments want reliable access to components that keep transport, communications, consumer electronics and industrial equipment working.

Japan Pursues Advanced Chips at Home

Japan's effort to transfer mature manufacturing to India sits alongside a domestic semiconductor revival. The Ministry of Economy, Trade and Industry (METI) has designated semiconductors as a national project and approved $7.7 billion in funding to strengthen manufacturing in Japan.

Rapidus has recently achieved pilot production of advanced chips using a 2 nanometer process. Pilot production is an early manufacturing stage used to develop and test a process before broader commercial output. The project reflects Japan's ambition to regain a stronger position in advanced chips.

Japan's most advanced factories still lag behind industry leaders Samsung and TSMC by nearly a decade. The country is therefore pursuing new development while continuing to rely on the areas in which it retains established industrial strengths.

The proposed partnership with India divides attention between two needs. Japan can direct domestic resources toward next generation innovation, while cooperation with India helps maintain production based on mature technologies within supply chains shared with partners.

TSMC continues to dominate advanced chip manufacturing. India may need years to match the capabilities of Taiwan or South Korea, but its focus on mature chips gives it a route into markets where the newest production process is less central than reliable output and competitive cost.

Western countries are also experiencing delays and cost overruns in their chip projects. Asia, led by Taiwan, South Korea, Japan and now India's developing industry, remains central to semiconductor manufacturing capacity.

Moving Supply Chains Takes More Than Investment

Rising labor costs and regulatory uncertainty in China have encouraged foreign companies to seek alternative manufacturing bases over the past decade. India offers a large talent pool, cost advantages and government incentives, making it an increasingly attractive destination.

Vietnam provides strong competition. It has been more successful at attracting foreign manufacturing investment because of streamlined regulations and a business friendly environment. India's administrative complexity and unpredictable policies have sometimes discouraged global companies, although recent reforms aim to address those problems.

India still needs to simplify regulations, improve infrastructure and create conditions that help foreign investors establish operations and stay. Financial support can encourage a factory project, while dependable infrastructure and workable rules help determine how that factory operates.

Apple's experience shows the scale of the task. The company has moved some assembly to India while retaining most manufacturing of valuable components in China. Shifting assembly is one step; moving the wider network of component suppliers is a more complex undertaking.

Major international businesses, including Micron and Applied Materials, have announced substantial investments in India. Those commitments indicate growing confidence in its manufacturing potential, alongside the work still needed to build a complete production network.

Japan's proposed transfer could help India develop that network by adding established technology and manufacturing experience. For Japanese companies, success depends on preserving the cost competitiveness that prompted the move while securing their production knowledge and access to components.

The Milestones Around the Manufacturing Push

Japan's declining share of the chip market, India's manufacturing policies and the current transfer proposal form a sequence stretching across decades. The immediate focus is the planned announcement during Modi's visit to Japan, followed by India's expected first domestic chips before the end of 2025.

• 1980s: Japan held about 50 percent of the global semiconductor market.
• 2014: Modi launched Make in India to support the country's ambition to become a global manufacturing hub.
• August 28, 2025: Japan and India are advancing the transfer plan ahead of its planned unveiling during Modi's visit for a summit with Ishiba.
• End of 2025: India's first domestically produced chips are expected.
• 2026: India's semiconductor market is projected to reach $63 billion.

The practical changes would be different for each country. India would gain more domestic capacity to make components it has long imported. Japan would gain another production base for established technologies while directing resources toward advanced manufacturing at home.

The partnership combines Japanese manufacturing knowledge with Indian cost advantages and talent. Its central task is concrete: keeping essential chips and other components available through a more diversified production network, while building an industry in India that reaches beyond the assembly of finished products.

The Bottom Line

• Japan and India are preparing a plan to move mature chip, LCD, battery and other production from Japan to India.
• JETRO and the Confederation of Indian Industry developed the initiative, which is set to be unveiled during Modi's visit to Japan.
• The plan targets established technologies under pressure from lower priced Chinese products.
• India has committed nearly INR 629 billion of an earmarked INR 650 billion to semiconductor production incentives.
• India's first domestically produced chips are expected by the end of 2025, and its semiconductor market is projected to reach $63 billion in 2026.
• Technology protection, design, equipment research and workforce development are part of the cooperation.
• Japan is pursuing advanced semiconductor development at home, including Rapidus's pilot production of 2 nanometer chips.
• India's regulatory and infrastructure challenges remain central to turning investment commitments into a wider manufacturing industry.