The India chip venture received a major boost as the government approved $360 million in subsidies for Japan’s Mitsui & Co and Aoi Electronics to establish a chip assembly facility with local partner Kaynes Semicon.
The three companies recently sealed a strategic business partnership. Mitsui stated it acquired the exclusive right to handle raw materials procured by Kaynes from Japanese-affiliated suppliers. The company added it will work with its partners to support the new business.
Facility Location and Timeline
Kaynes Semicon obtained government approval in September 2024 to set up the facility in Sanand, Gujarat. The company aims to start operations in the second half of 2026. The Sanand site positions the venture within one of India’s key industrial corridors.
India chip venture Under the Semicon India Programme
The subsidy falls under the Semicon India Programme, through which the government earmarked INR 760 billion ($8.2 billion) to develop semiconductor and display manufacturing ecosystems. The programme targets the full spectrum of chip production infrastructure across the country.
As of now, the government has approved ten projects under the programme. These projects carry a total planned investment of approximately INR 1.6 trillion. The approved projects include two fabrication plants and eight packaging facilities.
Role of Aoi Electronics
Mitsui stated that Aoi Electronics is the largest semiconductor back-end process company in Japan. Back-end processing covers chip assembly, testing, and packaging — the exact scope of the new Indian facility. Aoi’s involvement brings established technical expertise to the project.
“Mitsui acquired the exclusive right to handle raw materials procured by Kaynes from Japanese-affiliated suppliers and will work with them to support the new business.”
Mitsui & Co, Company Statement
Broader Context for India’s Semiconductor Push
India has accelerated efforts to build a domestic semiconductor industry as global supply chain pressures continue. The Semicon India Programme represents the government’s primary policy instrument for attracting chip investment. The ten approved projects signal growing international interest in India as a manufacturing destination.
The Mitsui-Aoi-Kaynes partnership adds Japanese industrial capacity to India’s expanding chip ecosystem. Moreover, the exclusive raw materials arrangement gives Mitsui a defined commercial role beyond equity participation. Consequently, the deal structure ties Japanese supply chains directly into India’s semiconductor ambitions.