Japan becomes second Quad partner to sign semiconductor pact with India

Japan is the 2nd QUAD (Quadrilateral Security Dialogue) power after the United States of America signed an agreement (Memorandum of Cooperation) with India for the development of the joint semiconductor ecosystem and maintaining the resilience of its supply chains.

Ashwini Vaishnav, the Union Minister for Electronics and Information Technology and Yasutoshi Nishimura, the Ministry of Economy, Trade and Industry, signed the agreement MoC) between Japan and India on July 21, 2023, in New Delhi.

The development comes weeks after PM Narendra Modi’s state visit to the US and a week ahead of Semicon India (2023), scheduled between July 28 to July 30, 2023, in Gandhinagar, the capital of Gujarat, which will witness the presence of some of the world leaders from semiconductor ecosystem.

A cooperation agreement with Japan will enable and open the scope for Japanese companies to the Rs 76,000 crore semiconductor incentive scheme, thereby boosting the semiconductor ecosystem in the country.

It will enable and open the scope of Japanese companies, such as the computer memory manufacturing Kioxia, IT and electronics major NEC Corporation, and Sony, among the others, for semiconductor and other electronic components incentive schemes of the Indian government.

Japan’s Rapidus Corporation, which is a semiconductor manufacturer established with the support of eight Japanese companies, including SoftBank, Sony and Toyota, will play a major role in this agreement.

The talks between the Rapidus leaders and Indian authorities are already in advanced stages, with the discussion focused on expanding the corporation presence to India. The headquarters of Rapidus is located in Tokyo, the capital of Japan.

“Japan and India have signed a memorandum for semiconductor design, manufacturing, equipment research, and talent development to bring resilience to the semiconductor supply chain,” Vaishnaw said. The nations will create an implementation organisation that will work on government-to-government and industry-to-industry cooperation, Vaishnaw added.

“Everybody wants a resilient semiconductor supply chain, and India and Japan are important partners. This is in furtherance with our Prime minister Narendra Modi’s successful state visits this month where many agreements were signed, and that is reflected in the cooperation with other countries today,” he said.

“Semiconductor Industry will become a USD trillion industry from the USD 650 billion at present. This will require enormous talent and significant growth at multiple locations in the world. Japan views India as a partner where complementary strengths can be used,” Vaishnaw said.

The ministers said that Japan houses certain companies that are global leaders in raw form of semiconductors wafers, chemicals and gases, lenses that are used in chip manufacturing equipment and display technologies etc. “If we can bring this base to India, it will be a big milestone,” Vaishnaw said.

When asked about the impact of China restricting the export of critical semiconductor elements such as Gallium and Germanium, the minister said that there are more sources of these critical elements in the world.

While India has just embarked on its semiconductors manufacturing journey, Japan is a leading player in this industry. It has companies that not just manufacture ships but also provide raw materials such as ingot, wafers, gases and more to even the world chip leaders such as Taiwan.

And as India is aiming to bring its semiconductor manufacturing in-house, it will need the supply of all raw materials, which partners with a country like Japan can bring in. Before signing the agreement (memorandum of cooperation) with Japan, PM Narendra Modi and US President Joe Biden announced the iCET (Initiative on Critical and Emerging Technology).

Under the iCET, both India and the US are focusing on building a resilient semiconductor supply chain in-house. The nations are enhancing bilateral collaboration along with the support and development of semiconductor design, manufacturing, and fabrication systems in India.; and by leveraging complementary strengths, both countries intend to develop a skilled workforce that will conduct semiconductor supply chains and encourage the development of joint ventures and technology partnerships on mature technologies nodes and packaging in India.