India & Japan Join Forces for Semiconductor Development!

In a significant stride towards strengthening its semiconductor industry, the Indian government has recently signed a memorandum of cooperation with Japan. Following a successful partnership on critical and emerging technologies with the US, this collaboration aims to foster semiconductor design, manufacturing, equipment research, talent development, and supply chain resilience. The move is expected to attract Japanese companies to India's lucrative Rs 76,000 crore semiconductor incentive scheme, propelling the nation's semiconductor ecosystem to new heights. In this blog, we delve deeper into the potential implications of this alliance and how it can transform India into a major player in the global semiconductor landscape.

Unlocking Synergies: Complementary Strengths

India and Japan boast complementary strengths in the semiconductor domain. For decades, Japan has led the semiconductor industry, giving rise to numerous related industries. This partnership aims to bring Japan's wealth of semiconductor expertise to India, empowering the nation to establish its own semiconductor prowess. Ashwini Vaishnaw, the Minister of Communications and IT, envisions leveraging India's pool of over 50,000 design engineers, making the country an attractive destination for semiconductor ventures.

The Implementation Organization: Forging Government-to-Government and Industry-to-Industry Ties

As part of the collaboration, India and Japan will establish an implementation organization to facilitate collaboration between governments and industries. Japan, with its expertise in silicon wafer manufacturing, ingot production, gasses, displays, and equipment, sees India as a strategic partner with complementary strengths. This alliance opens doors for Japanese companies like Kioxia, NEC Corporation, Sony, and others to participate in India's semiconductor and electronic components incentive schemes, further accelerating India's technological advancement.

Driving Investment with Cost Competitiveness and Talent Base

The semiconductor partnership with Japan is expected to drive Japanese companies to invest in India due to its cost competitiveness, market potential, and vast talent base. India's cost-effective manufacturing capabilities and a burgeoning market make it an attractive proposition for semiconductor businesses seeking growth opportunities. Moreover, India's pool of skilled design engineers provides a competitive advantage and positions the country as a global destination for semiconductor development and innovation.

Transitioning to Semiconductor Manufacturing

Through this collaboration, India aims to shift from assembly and advanced packaging of semiconductors to actual manufacturing. The partnership empowers India to focus on developing the semiconductor ecosystem for nodes below the 28-nanometer scale, providing a significant boost to the country's indigenous semiconductor capabilities. As the demand for larger nodes, such as 40 nanometers, 60 nanometers, 90 nanometers, and 28 nanometers, continues to rise, India's strategic collaboration with Japan is set to bolster its position in the semiconductor market.

Rapidus: Japan's Key Role in the Partnership

Japanese semiconductor manufacturer Rapidus, consisting of major companies like SoftBank, Sony, Toyota, Denso, and others, plays a pivotal role in this alliance. With its wealth of experience and technological prowess, Rapidus is expected to be a catalyst in driving the partnership forward. This collaboration further solidifies Japan's commitment to empowering India's semiconductor sector and fostering technological growth.

US-Based Micron Technologies' Investment in India

In recent developments, US-based Micron Technologies announced plans to establish a $2.75-billion chip packaging unit in India. This significant investment signals India's emergence as a key player in the semiconductor market. By December 2024, the first locally manufactured chip under the project is expected to roll out, with an annual production capacity worth $1 billion once the facility is fully operational. The government is also gearing up for six more semiconductor projects in the coming year, reflecting its dedication to fostering a robust semiconductor ecosystem.

Conclusion

The partnership between India and Japan for semiconductor development holds immense promise for both nations. India's skilled talent pool, coupled with Japan's semiconductor industry experience, will undoubtedly revolutionize the semiconductor landscape in India. This collaboration is poised to attract significant investment from Japanese companies, driving technological advancement, and making India a prominent destination for semiconductor research, design, and manufacturing. As the implementation organization begins its work, the stage is set for India to emerge as a global semiconductor powerhouse and fuel its journey towards a digitally empowered future.