Japan-South Korea Business Relations Hit Five-Year High as Tech Collaboration Expands

The business relationship between Japan and South Korea has reached its strongest point in five years, with 44% of executives from both countries anticipating improved bilateral ties according to a January 2026 Nikkei-Maeil Business Survey. This marks a dramatic increase from just 16% in 2025 and represents the highest optimism since the 2018-2019 trade disputes that saw Japan impose export controls on key semiconductor materials bound for South Korea.

This diplomatic thaw comes as both nations adopt increasingly pragmatic approaches to economic cooperation. The survey identifies semiconductors and robotics as primary areas for joint development, with 68% of respondents highlighting advanced chips and 52% prioritizing automation technologies as fields ripe for collaboration. This alignment occurs against a backdrop of shifting global supply chains, where Japan's strength in semiconductor materials (holding 90% market share in photoresists) complements South Korea's dominance in memory chip production (41% global DRAM market share).

Market data underscores the economic imperative: Bilateral trade reached $88.3 billion in 2025, a 12% year-over-year increase, while Japanese foreign direct investment in South Korea surged to $3.2 billion – the highest since 2017. Technology transfer agreements between the two nations grew 18% year-over-year, particularly in compound semiconductor manufacturing and industrial robotics.

The strategic implications extend beyond bilateral gains. Improved relations create a more cohesive tech alliance within the U.S.-led Chip 4 initiative, strengthening supply chain resilience against geopolitical uncertainties. This cooperation enables coordinated responses to China's semiconductor expansion, with both nations now jointly developing next-generation chip packaging technologies to maintain competitive advantage. Robotics collaboration similarly accelerates factory automation capabilities as manufacturers seek alternatives to Chinese production hubs.

Despite progress, challenges remain: Only 29% of surveyed executives believe historical disputes are fully resolved. However, the current trajectory signals a structural shift in Northeast Asia's tech economy. Shared investments in silicon carbide wafer production and dual-use robotics suggest this partnership will influence global tech manufacturing through at least 2030, potentially reshaping regional power dynamics beyond the $1.2 trillion semiconductor industry.