India Partners With Japan To Strengthen Semiconductor Supply Chain

India and Japan, which have been aligning their policies to expand semiconductor manufacturing, are collaborating on a semiconductor supply chain partnership. A Memorandum of Cooperation (MoC) for the pact has now been approved by India's cabinet.

The MoC on the Japan-India Semiconductor Supply Chain Partnership was signed in July by India's Ministry of Electronics and Information Technology and the Ministry of Economy, Trade and Industry of Japan.

The agreement makes Japan the second Quad partner, after the U.S., to sign a pact with India to cooperate on developing the semiconductor ecosystem and resilient supply chains.

"The MoC intends to strengthen cooperation between India and Japan toward enhancement of semiconductor supply chain, recognizing the importance of semiconductor for the advancement of industries and digital technologies," an official statement released Wednesday read. "The MoC shall come into effect from the date of signature of the parties and shall remain in force for a period of five years."

Japan has an advanced semiconductor industry and has held the status of being the world's largest maker of semiconductor materials for decades. But currently, it is lagging behind other semiconductor powerhouses by an estimated 10 years, the Center for Strategic and International Studies (CSIS) said in a report in August.

On the other hand, India is comparatively a newbie in the industry and does not play an indispensable role in the global supply chain at the moment. However, New Delhi has created new policies to build its domestic semiconductor ecosystems, and new partnerships and alliances can drive the expansion of the local ecosystem.

Based on the ongoing India-Japan Digital Partnership (IJDP) and India-Japan Industrial Competitiveness Partnership (IJICP), "this MoC on Japan-India Semiconductor Supply Chain Partnership would further broaden and deepen the cooperation in the field of electronics ecosystem," the statement said. "Recognizing the importance of semiconductor for the advancement of industries and digital technologies, this MoC would provide for the enhancement of semiconductor supply chain resilience."

India Electronics and Semiconductor Association (IESA) and global industry analysis firm Counterpoint Research said earlier this year that the country's current trajectory poses the semiconductor market to rise to $64 billion by 2026. In 2019, it was valued at $22.7 billion.

"With India's semiconductor market projected to soar to a staggering $64 billion by 2026, it offers an exceptional opportunity for global semiconductor manufacturing. This tremendous growth, as indicated by the joint study conducted by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research, reflects the country's dedication to diversification and self-sufficiency in the face of increasing semiconductor demand worldwide," Counterpoint Research previously told International Business Times.

The current conditions in India position it as the vital linchpin in the semiconductor industry, it said.

"The projected landscape solidifies India's position as a force to be reckoned with in the semiconductor landscape," the firm added.