Reports · Oct 18, 2026
India and Japan Sign Semiconductor Supply Chain Partnership, Co-Investing USD 8 Billion in Advanced Packaging Facilities
Indian Prime Minister Narendra Modi and Japanese Prime Minister Sanae Takaichi signed a Semiconductor Supply Chain Partnership in New Delhi on 3 October 2026, committing a combined USD 8 billion to build advanced chip packaging and testing facilities in Gujarat and Tamil Nadu. The partnership, backed by Japan's Rapidus consortium and India's Tata Electronics, targets production of 3D chip packages for automotive and industrial applications by 2029.
Contents
Key takeaways
- USD 8 billion combined investment in advanced chip packaging and testing in Gujarat and Tamil Nadu.
- Japan's Rapidus consortium brings advanced 3D packaging technology; Tata provides manufacturing scale.
- Target production of 3D packages for automotive and industrial sectors by 2029.
- Agreement includes a joint R&D centre at IIT Bombay and Kyushu University.
- US CHIPS Act partner incentives to be extended to the India-Japan facilities under a bilateral arrangement.
Partnership Structure
The partnership divides responsibilities along comparative advantage lines: Rapidus and its member companies — including Sony Semiconductor Solutions and Kioxia — contribute equipment, process technology and engineering expertise for advanced 3D chip stacking and through-silicon via packaging. Tata Electronics contributes factory space, local workforce and supply chain integration with its existing component manufacturing operations in Tamil Nadu, which already supply Apple and other original equipment manufacturers.
A joint venture entity, Indus-Nippon Semiconductor Technologies (INST), will operate the facilities and hold the intellectual property developed during the partnership, with Rapidus holding a 40 percent stake and Tata 60 percent. The Government of India has committed a production-linked incentive worth USD 1.6 billion over ten years against output benchmarks.
Technology Scope
The initial production targets focus on automotive-grade packaging, where Japan has historically dominated and where India's growing domestic automotive sector provides a natural customer base. A second phase from 2031 is intended to address AI inference chip packaging, where demand is growing most rapidly. The joint R&D centre will conduct research into next-generation substrate technologies with applications across both product categories.
Geopolitical Context
The partnership advances the Quad's semiconductor diversification agenda, which has struggled to produce concrete industrial commitments since the grouping was relaunched in 2021. The US has indicated it will extend access to the CHIPS Act's international technology diffusion provisions to the INST facilities, providing an additional subsidy layer on top of Indian incentives. China's Ministry of Commerce described the partnership as 'protectionist industrial policy' targeted at displacing Chinese manufacturers.
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