Top Semiconductor Shares in India 2024: Semiconductor Manufacturing Companies to Add to Your Watchlist

We're witnessing the artificial intelligence (AI) supercycle, marked by rapid advancements and integration of AI across industries.

As we embark on this supercycle, semiconductors are the foundational technology powering these AI-driven tasks.

These chips are the driving force behind AI's groundbreaking advancements, starting right from powering your smartphones to enabling autonomous vehicles.

For instance, say you're using a modern smartphone or a smartwatch. Chances are, you're directly using semiconductors, which power today's high-tech devices.

The recent development that has put India in the spotlight is the country's decision to okay several semiconductor chip fabrication units in various states with a massive outlay.

That's right.

Realizing the need to break away from China and other geographies for chips, India is setting up fab units at a breakneck pace.

This has opened up multiple opportunities in the associated end industries (demand side) and supply side (suppliers to chip manufacturing) for India.

This article aims to spotlight the key players within the industry, dissect their revenue streams, and explore the financials of the most influential companies in the semiconductor space.

So let's look at the top Indian semiconductor stocks that can add significant value during this boom.

#1 HCL Technologies

In July 2023, it was reported that HCL Technologies would set up an assembly, testing, marking, and packaging (ATMP) facility for semiconductors, with an estimated project value of US$ 200-300 million.

Latest developments suggest that the HCL Group is moving closer to setting up an Outsourced Semiconductor Assembly and Test (OSAT) facility in the state of Karnataka.

HCL Tech, with its dominant role in semiconductor chip designing, has set up management teams in Taiwan, South Korea, and Vietnam in recent months seeing the growth potential of this business.

Taiwan's Foxconn Technology Group has formed a joint venture (JV) with HCL group to set up a semiconductor OSAT unit.

Foxconn's commitment to India's semiconductor ecosystem does not just bring in funds and technology but also demand and supply chain for the ancillary products. The tie-up, therefore, opens up a plethora of opportunities for HCL Tech.

Earlier, HCL group was eyeing a stake in semiconductor wafer fab applicant ISMC Analog. It had signed a term sheet to invest but those talks eventually fell through.

Note that HCL Tech had acquired Sankalp Semiconductor in 2019. Sankalp is a semiconductor design service partner of top chip manufacturers, design foundries and OEMs across the globe.

HCL Technologies provides lithography, etching, Ion implant, assembly, and packaging, along with testing services globally in the semiconductor space.

According to its website, the company has partnerships with six out of the top 10 semiconductor OEMs and over 2,000 highly trained engineers in the semiconductor ecosystem (OEM, fab, and OSAT).

This positions the company well to expand its operations and contribute to the growth of India's semiconductor ecosystem.

In the quarter ended December 2023, HCL Tech highlighted it's seeing strong demand for Gen-AI, cloud migration, SAP, data modernization, and cyber security.

The company reported strong operating margins at 20% while attrition was the lowest in almost 3 years.

#2 Dixon Technologies

Dixon Technologies is a multinational electronics manufacturing and services company.

Its core competence lies in manufacturing consumer electronics used daily like televisions, washing machines, smartphones, LED bulbs, battens, downlighters, and CCTV security systems.

So, it's easy to see how the stock is involved in the semiconductor ecosystem.

The company's electronic manufacturing services (EMS) segment is a key contributor to its revenue. The EMS theme exhibits strong traction with significant growth opportunities in India, making it an attractive long-term investment avenue.

Dixon is also a key beneficiary to the government's PLI (production linked incentives) scheme for the electronics segment.

Dixon has a JV with Japanese company Rexxam for manufacturing Printed Circuit Boards (PCBs). Rexxam deals in the development, design, manufacturing, and marketing of electronic products, peripheral devices of semiconductor production equipment, etc.

Currently, it's building a new facility in Noida to make 1.3 million laptops for Taiwanese PC maker Acer.

It also won a contract from Chinese personal computer maker Lenovo recently. Dixon's contracts allow it to assemble laptops and notebooks for Lenovo in India.

Over the past decade, Dixon has become a credible manufacturer of television sets and washing machines in India.

In fact, it manufactures every third TV and one out of every four washing machines sold in India. So, Dixon has demonstrated its value proposition in these consumer durable categories.

But IT hardware, semiconductor chips, smartphones are the product categories that can fetch the company bigger share of the high value electronics pie, going forward.

Coming to its latest financials, Dixon's consolidated revenues for the quarter ended December 2023 doubled while net profit spiked 87%.

The company is continuously investing in capacities and diversifying into new product markets. All these efforts and its strong balance sheet are expected to aid Dixon's growth in the coming years.

#3 ASM Technologies

ASM Technologies is engaged in the business of providing consulting and product development services in the areas of engineering services and product R&D.

It has a 50-50 joint venture (JV) with HHV group, which is slated to be one of India's state-of-the-art semiconductor focused equipment manufacturing facilities.

The facility will include services in designing and manufacturing semiconductor tools, sub-systems, system components, and providing field support. The management considers it a key growth vertical.

In November 2023, the company acquired UK-based Semcon Engineering UK Ltd to improve its business in foreign lands.

Apart from semiconductors, the company caters to hi-tech medical equipment, automotive, aerospace, enterprising storage, and networking consumer electronics, etc.

Through its arm ASM Ventures, it also makes strategic minority investments in early-stage tech companies in India and abroad.

The company has forayed into areas of virtual reality (VR), internet of things (IoT), and open edX platform management.

In the first nine months of FY24, the company's revenue declined by 7% mainly on account of reduction in revenue from its top customer.

The main clients of ASM include reputed customers across US and Europe who manufacture semiconductor equipment and network devices.

Higher interest costs on account of increased debt have also impacted its margins.

The company is expected to turnaround its business soon following three successive quarterly losses.

#4 L&T

Semiconductors, 5G telecom, renewable energy, SpaceTech, metro rail, data centres, and defence. How many Indian companies have their toes dipped in all these segments?

Right now, the only company is L&T!

That's right... L&T is getting future ready by investing heavily in advanced futuristic themes.

The engineering behemoth, over the years, started reducing the share of its core engineering and construction business.

As a result, the company now finds itself well poised to have the first mover advantage in sectors that are witnessing massive regulatory tailwinds.

For instance, L&T has forayed into designing for fabless semiconductor chip by setting up a wholly owned subsidiary with an investment of Rs 8.3 bn.

Given the shortage for semiconductor chips, L&T's foray into designing automobile and industrial chips is perfect example of right time and right place.

What also aids L&T is that its subsidiaries like L&T Tech offer a presence in crucial and diverse technologies.

Coming to its financials, in the last three years, the revenue of the company has grown at a compound annual growth rate (CAGR) of 10%, driven by a high inflow of orders across segments.

The net profit also grew at a CAGR of 39.3% on the back of the high-margin EPC business.

Its return on equity (RoE) was 14.2% at the end of financial year 2023, an impressive 8% improvement from three years ago. The return on capital employed (RoCE) also improved and stood at 17.9%.

In the December 2023 results, revenue and profit grew driven by higher execution momentum in international projects.

With the traction in order book and higher margins in the new revenue segments, the company also sees its return on equity nearly double in the next 5 years.

Given the scale at which the company is growing across all its businesses, sound financials, and good growth prospects, we won't be surprised to see L&T continue its good run for a long time to come.

#5 Tata Elxsi

Tata Elxsi has a presence across industries. However, most of the revenue is generated from servicing the following industries.

• Automotive
• Healthcare
• Media and communication
• Semiconductor

It accelerates semiconductor and device companies' development lifecycles by providing platform software, system architecture, and design.

The Tata group company has an established presence in the designing and development of systems and software for varied end-user industries, including semiconductors and Tata Elxsi is slated to play an important role.

The company has a tie up with Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, for setting up a state-of-the-art design center in Bangalore that will develop targeted solutions for electric vehicles (EV).

Tata Elxsi and Renesas will bring together their deep domain expertise, intellectual property, and assets to the NEVIC and collaborate to create reference designs and solution accelerators for critical EV subsystems like battery management systems and motor control units, among others.

In July 2022, Tata Motors partnered with Renesas Electronics to design and develop semiconductors.

The tie-up was expected to help Tata Motors tide over the global auto chips crunch that has affected its earnings and resulted in production cuts and even temporary plant shutdowns.

Cut to April 2023, Renesas has now introduced an NB-IoT (Narrowband Internet of Things) chipset specifically for the Indian market. The new RH1NS200 is an LTE NB-IoT modem chipset that is designed to operate seamlessly on the networks of all major Indian telecommunications carriers.

The new chipset also can be used in asset tracking, lighting, security, and numerous other applications.

Coming to its financials, Tata Elxsi's revenue increased by 9.4% YoY in the December 2023 quarter.

It plans to ramp up investments in the coming quarters to expand the purview of applications and offerings across industries, product life cycles, and domains.

#6 Vedanta

In February 2022, Vedanta announced its plans to set up a semiconductor plant in a joint venture with Foxconn (Hon Hai Precision). The company was one of the first few participants in the government's PLI scheme.

The joint venture with Foxconn was Vedanta's second attempt to invest in the country's semiconductor and display ecosystem. Nearly five years ago, the company had announced, and later abandoned, its plan to set up a display manufacturing unit with an investment of US$ 10 billion (bn).

However, it fell through. Still, Vedanta's commitment to foraying into the semiconductor industry still holds.

In July 2023, the Vedanta group said it will acquire the semiconductor and display businesses from sister concern Twin Star Technologies ltd. This makes it the country's first company in the integrated semiconductor and display fab business.

The group also owns AvanStrate, the fourth largest manufacturer of glass substrate in the world. Glass substrate is used in packaging of semiconductors.

The Vedanta group has spent the past decade simplifying its structure and consolidating it into one listed entity. The group has brought all its businesses in India, from metals to crude, under one umbrella, Vedanta.

But now, it has decided to split its businesses and have separate entities.

The company's Chairman Anil Agarwal recently reiterated that the company is still committed to its plan to set up a semiconductor manufacturing unit, dismissing talks that the government may have put on the backburner the metals and mining company's plan to foray into the sector.

One key concern for Vedanta is its high debt. Vedanta has a total debt of Rs 434 bn as of financial year 2023. This burgeoning debt has led to an uncomfortable debt to equity ratio of 1.1x and a subpar interest coverage ratio of 4.3x.

Also, the progress of Vedanta's semiconductor business will depend on the company identifying a new technology partner after Foxconn's exit.

#7 Kaynes Technology

Kaynes Technology is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturer in India.

The company has garnered over three decades of expertise in providing comprehensive Electronic System Design and Manufacturing (ESDM) services.

With a team of highly skilled engineers and technicians, KTIL caters to a diverse range of industries, including automotive, industrial, aerospace and defence, Internet of Things (IoT), Information Technology (IT), and more.

In November 2023, Kaynes Technology raised Rs 14 bn to set up a semiconductor OSAT (outsourced semiconductor assembly and test) manufacturing and compound semiconductor facility in Telangana.

With an investment of Rs 28 bn, the facility is set to occupy a 40-acre plot in the Ranga Reddy district of Telangana.

This facility is designed to be a world-class plant, incorporating state-of-the-art technology and machinery.

The OSAT will be established under the umbrella of Kaynes Semicon, a subsidiary specifically created by Kaynes Technology to spearhead its entry into the OSAT/ATMP (assembly, testing, marking, and packaging) services.

Additionally, Kaynes Semicon will collaborate with IIT Bombay to establish an R&D centre focused on package research.

Looking beyond the semiconductor domain, Kaynes Technology is poised for substantial growth by reinforcing its footprint in the smart meters and aerospace industries.

The company's substantial order book, valued at more than Rs 30 bn, will be executed over the next 18-20 months, indicating promising revenue trajectory.

#8 Moschip Technologies

Moschip Technologies offers turnkey analog, digital, and mixed-signal ASIC and IP design services. It has emerged as a leading semiconductor design services company in India.

In FY22, the company made significant progress with a high-speed SerDes IP portfolio and design wins with tier-1 customers. It experienced strong growth with existing customers for design services.

It also acquired new customers in North America and helped them transition from 2G to 4G.

With Softnautics Inc's acquisition in FY23, the company strengthened its Embedded System Design capabilities.

Softnautics has established strong customer relationships with top-tier companies across North America and will add 185+ employees to current MosChip talent pool across various domains.

Recently, the company announced the appointment of Srinivasa Rao Kakumanu as the new CEO and MD.

The Chip-ACT in US, new foundries in Europe and Japan, and the semiconductor mission in India are opening new opportunities for the company.

Moschip has already applied for DLI scheme to develop a chip for smartmeter applications.

10 out of top 20 semiconductor companies are Moschip's customers.

Moschip has constantly improved its profit for the past three quarters, and it could register one of its best yearly performances in FY24.

#9 CG Power

CG Power, also known as Crompton Greaves Power, is an Indian multinational company that specializes in electrical equipment and engineering solutions.

The company provides a wide range of products and services including transformers, switchgear, motors, automation products and EPC solutions for power transmission and distribution.

CG Power has a strong presence in both domestic and international markets, with operations in over 50 countries.

In November 2023, it was reported that the company will establish an outsourced semiconductor assembly and test facility in India, involving an investment of around US$ 791 million (m) spread over five years.

This facility recently got approval from the Indian government, positioning CG Power as one of the top semiconductor companies in India.

The semiconductor manufacturing unit is being set up in Sanand, Gujarat. The products will cater to industrial, automotive, and power applications.

The new facility is expected to ramp up production to 15 million units per day. Reportedly, it could contribute Rs 3 bn to the CG Power topline at an average selling price of US$ 0.6 per chip.

In recent years, the company has undergone significant restructuring and has implemented several strategic initiatives to improve operational efficiency and profitability.

In 2023, the company allocated Rs 2.8 bn for expanding motor capacity and Rs 1.25 bn for transformer expansion, making a total capital expenditure of over Rs 5 bn for the next two years.

Notably, the company is actively seeking a technology partner for the development of electric vehicle (EV) motors and controllers, signalling a strategic move into the burgeoning EV space.

#10 RIR Power Electronics

Erstwhile Ruttonsha, RIR Power Electronics was established by Mr. Ruttonsha in technical collaboration with International Rectifier Corporation USA. In 2000, it set up its export oriented unit (EOU).

Today, RIR is a market leader in Power Electronics. It has over 53 years of experience and operations in 10+ countries.

It is the only company in the private sector to manufacture Semiconductor devices right from the diffusion stage.

RIR's product portfolio includes low-power to high-power devices and IGBT Modules that find applications in welding, elevators, battery charges, railways, medical equipment, etc.

In November 2023, RIR Power Electronics received official approval from the government of Odisha for a substantial investment of Rs 5.1 bn.

This investment is earmarked for the establishment of a state-of-the-art facility for the manufacturing, fabrication, and packaging of Silicon Carbide (SiC) devices in Info Valley, Khordha, Odisha.

SiC is recognized as a cutting-edge semiconductor material, offering advantages over traditional silicon semiconductors. These advantages include enhanced power handling capabilities, increased efficiency, and greater durability.

SiC devices have a wide array of applications, particularly in electric vehicles, renewable energy systems, and industrial automation.

The forthcoming facility in Odisha marks a significant milestone for RIR Power Electronics as it represents the company's first manufacturing unit in India.

Over the past three years, RIR Power Electronics has demonstrated impressive financial growth. Its revenue has seen a compound annual growth rate (CAGR) of 23.9%, while net profit has shown a growth of 71.3%.

Going forward, the company continues to focus on the high-power semiconductor devices business and foresees ample opportunities for growth in Export Markets.

Visicon Power Electronics Pvt, a subsidiary of RIR is setting up a Silicon Carbide (SiC) wafers plant in Halol, Gujarat. The installation of the Epitaxy Reactor is completed and is undergoing trial runs. The plant is expected to start commercial production from Q4FY24 onwards.

#11 Rajesh Exports

Rajesh Exports is the only company in the world with a presence across the entire value chain of gold - from refining to retailing. Rajesh Exports is the largest processor of gold in the world, processing around 35% of gold produced.

In 2022, the company agreed to invest US$3 billion in Telangana to set up the country's first electronic-display plant.

Rajesh Exports has been an applicant for Prime Minister Narendra Modi's US$10 billion incentive plan to push companies to set up semiconductor and display operations in India.

The company, which has no prior experience in electronics manufacturing, is making the investment through Elest, a unit it incorporated for diversifying into making products such as displays and electric vehicles (EVs).

In November 2022, Rajesh Exports incorporated a fully owned subsidiary for energy storage solutions. The largest gold financier in the world setting up a battery facility...let that sink in.

In January 2023, Rajesh Exports signed an agreement with the union ministry and Karnataka government for a 5 GW lithium-ion cell factory.

Shares of the company have fallen a lot over the year gone by and the most recent downtrend comes after the company posted a 97% drop in its quarterly net profit!

Revenue declined over 30% while margins contracted to almost nil.

Going forward, if the company announced or makes a serious impact in the semiconductor industry, it could be a strong contender for staging a comeback.

#12 MIC Electronics

MIC Electronics is a global leader in the design, development & manufacturing of high-end telecom equipment.

The company recently announced that it has developed a 42V/3A EV battery charger for e-cycles and two-wheelers.

It's also developing high power rating EV battery chargers for e-cycles and two-wheelers.

The company is directly or indirectly also involved in the semiconductor industry. Although it's not setting up a big facility for the same as big players mentioned above, it plays a key role on the tech side.

After posting a loss for more than 10 consecutive years, the company turned profitable in 2022 and it's looking at the highest net profit this year going from its quarterly performance.

For the first nine months of FY24, the company derived around 71% of its revenue from the LED segment followed by 27% from automobile and 2% from medical & others.

Note that MIC Electronics has received a slew of orders in the past six months, with majority of orders catering to the railways space and for semiconductor chips.

Think of small orders like replacement of IP based integrated passenger info at stations.

It is expanding towards areas to identify profitable business lines beyond its core operations in the Indian Railway sector.

Going forward, revenue contribution from its battery and semiconductor divisions could see an uptick.

#13 Surana Solar

Part of the Surana group, Surana Solar is in the business of manufacturing solar photovoltic modules, generation of wind and solar power energy and trading of other solar related products.

The Group has three main operating and listed companies - Bhagyanagar India, Surana Solar and Surana Telecom & Power Ltd.

While not much is known about what the company is currently doing in the semiconductor space, it does have some direct or indirect relation.

Whenever there's new around semiconductors or if the government approves PLI scheme for the same, shares of the company have shot up.

#14 SPEL Semiconductor

SPEL Semiconductor is engaged in offering electronic integrated circuits (ICs). Its products are used mostly in cell phones, computers, notebooks, and personal digital assistants.

Its facility, Natronix, is India's first and only semiconductor IC assembly & test facility.

SPEL Semiconductor was the only company to register for semiconductor packaging under the government's PLI scheme.

Packaging is an essential part of semiconductor manufacturing and design. It's usually done by an outsourced semiconductor assembly and test (OSAT) vendor.

It affects power, performance, and cost on a macro level, and the basic functionality of all chips on a micro level.

As semiconductor production booms in the country, the company is set to benefit from being the only OSAT in the country.

The company's existing customers are some of the biggest integrated device manufacturers (IDMs) and fabless companies in the US, Asia, and Europe.

Coming to its financials, SPEL is still a loss making company and it has posted losses for the first three quarters of FY24.

The record rally in Nvidia shares in recent sessions is seen having a positive impact on semiconductor-related stocks including SPEL Semiconductors.

#15 VA Tech Wabag

VA Tech Wabag is a leading global player in the water technology space, providing comprehensive solutions for water and wastewater treatment, desalination, and industrial water treatment.

With a presence in four continents, the company is a pure-play water technology multinational offering a wide range of solutions focused on conservation, optimisation, recycling, and reuse of resources, directed at addressing water challenges across the world.

Sooner or later, Va Tech Wabag was going to dip its toes in the semiconductor industry as semiconductor production requires considerable water resources.

Wabag is currently exploring opportunities in the semiconductor and bio-CNG areas. After a huge supply chain issue in the semiconductor sector post-Covid, several countries, including the developed world, are investing in their facilities to produce chips.

As semiconductor manufacturing requires a high level of extra-pure water, Wabag is keen to be part of this. A few years ago, Wabag did a project in the Middle East to supply pure water to one of the semiconductor manufacturing facilities.

Apart from semiconductors, the company is also taking part in the green hydrogen revolution. The company is in discussions with hydrogen developers to collaborate as their water partner. There is a lot of potential here, given the government's focus on green hydrogen.

It already supplies clean water to the semiconductor industry and plans to expand further and remain a dominant player globally.

Given the growing demand for clean water and wastewater treatment around the globe, Va Tech Wabag has a fair chance of doing well going forward.

#16 Ami Organics

I know what you're thinking... how come Ami Organics, a leading R&D driven manufacturers of specialty chemicals, caters to the semiconductor industry?

Ami Organics has 55% stake in Baba Chemicals which makes niche semiconductor chemicals. They claim to be the only makers in the country in their product category.

Ami Organics already is a reputed name in the chemical industry. With this acquisition, it has gotten a strong foothold in the semiconductor industry with high entry barriers.

The management expects that it can help Baba Chemicals scale up by five to six times. The margin in the acquired entity is strong at about 40%. Besides, it makes Ami's position stronger in electronic chemicals industry.

The company recently said that integration of Baba Fine Chemicals is underway and it's also planning capex deployment for its Ankleshwar facility and electrolyte business.

The company expects reaching optimum capacity utilization by FY26.

#17 Chemcon Specialty Chemicals

Another specialty chemical player involved in the semiconductor industry.

Chemcon Speciality Chemicals is a manufacturer of specialised chemicals, such as HMDS and CMIC which are predominantly used in the pharmaceuticals industry and inorganic bromides used as completion fluids in the oilfield industry.

It claims to be the only manufacturer of HMDC in India and third largest worldwide.

Interestingly, high purity HMDS finds applications in semiconductor industry and electronic chemicals. The company has applied for testing this for semiconductor applications.

This might be a time taking process and still in a speculative zone. But a positive result could give company a breakthrough in the semiconductor industry.

#18 Praj Industries

And lastly... there is Praj Industries.

Among the multiple sunrise industries, it is targeting to grow in, semiconductor is one.

A pure play to the surging demand for ethanol in the coming years, Praj Industries designs, manufactures and supplies fermentation and distillation equipment for manufacturing ethanol.

The company has evolved from an ethanol plant supplier to a global powerhouse. It enjoys a first-mover advantage, being in the business for decades and commands over two-thirds of the market share.

It boasts a presence spanning over 75 countries and is at the forefront of environmental, energy and agri-process solutions.

Praj Industries actively engages in ethanol production, employing both the traditional first-generation method using sugary feedstock and the innovative 'second-generation' approach utilising starchy feedstock.

Under its division Hi Purity System, it provides systems and tech to produce high quality water for clients in pharmaceutical, biotech, cosmetics, and wellness sector.

It also finds applications in semiconductor industry. In fact, the company booked its first order in the semiconductor sector for ultra-high purity water in FY23.

Between 2019-23, the business has done well, with revenues nearly doubling and net profit multiplying by 1.5 times.

While the margins have been rangebound, the expansion in profits in absolute terms has aided returns, with the Return on Capital Employed and Return on Equity propelling in the last 5 years.

Despite the robust growth in the business, the company has no debt on its books, which is highly commendable.

Looking ahead, the company expresses confidence in replicating this growth shortly, backed by various catalysts for both the bioenergy and other business segments.

Unlisted Semiconductor Companies to Watch Out

The above semiconductor companies are listed either on the BSE or NSE or both.

Apart from them, there are some BIG unlisted semiconductor players that are looking to soon list on the exchanges.

Here are few of them to watch out -

#1 Polymatech Electronics

Polymatech Electronics is an India-based semiconductor chip manufacturer.

The company designs, manufactures, and supplies opto-semiconductor chips and luminaries to a wide range of industries, including lighting, medical devices, data transmission, and specialised lighting.

The company was founded in 2007 and is headquartered in Chennai, Tamil Nadu. Polymatech has a state-of-the-art manufacturing facility in Oragadam, Tamil Nadu, which has a capacity of 300 million (m) chips per annum.

Its clients include Fortune 1,000 multinational corporations.

Polymatech Electronics has already filed for an IPO, and it looks to go public soon.

It is the first opto-semiconductor chip manufacturer in India. Opto-semiconductor chips are used in a wide range of applications, including lighting, displays, sensors, and medical devices. This makes Polymatech a unique and valuable company in the Indian market.

Coming to its financials... the company has achieved remarkable revenue growth, registering a compounded annual growth rate (CAGR) of 139.9% between the financial years 2021 and 2023.

This growth is evidenced by the increase in revenue from operations, which shot up from Rs 450 million (m) in FY21 to Rs 6,490.2 m in the financial year 2023.

While the net profit has increased at a CAGR of 198.8% during the same time.

This remarkable performance can be credited to the growing customer base and backing from government.

Looking ahead, the company has plans to expand its business to international markets. It intends to focus expansion primarily in North American, European, Middle East, and South East Asian markets.

The opto-semiconductor market presents a substantial growth opportunity, with a total addressable market projected to reach US$ 2.2 trillion (tn) by 2030, significantly surpassing its current size of around US$ 1.35 tn. This bodes well for Polymatech's position within the Indian semiconductor sector.

#2 Tata Electronics

Tata Electronics is a green field venture of the Tata Group. The company has expertise in manufacturing precision components.

Tata Electronics is a wholly owned subsidiary of Tata Sons that will set up new manufacturing facilities to manufacture customised products for its customers. The company has already taken the first step towards the same.

The government's recent approval of Tata Group for a semiconductor chip fabrication unit in Gujarat is a milestone for the Tata Group and India.

Tata Electronics Private Limited will set up a semiconductor fab in partnership with Powerchip Semiconductor Manufacturing Corp (PSMC), Taiwan. The plant will attract Rs 910 billion (bn) investment.

The plant will have a capacity to produce 3 bn chips every year, which will cater to industries like high-performance computing, electric vehicles, defence and consumer electronics, among other things.

PSMC is a major entity in the chip manufacturing space and ranks among the top ten semiconductor companies in terms of global revenues.

Tata's fabrication unit marks the entry of India into a sector with high industrial as well as strategic importance. Chips are used in all things electronic from debit cards to mobile phones, washing machines to aircraft, and missiles to space rockets.

This fab will have a manufacturing capacity of up to 50,000 wafers per month and will include next-generation factory automation capabilities deploying data analytics and machine learning to achieve industry-best factory efficiency.

Going forward, with a US$ 10 billion investment by 2027, Tata Electronics intends to significantly ramp up its precision manufacturing capabilities. This involves expanding their production capacity and diversifying their product portfolio to include complex electronic components.

The company plans to double the size of its existing iPhone casing unit in Hosur, Tamil Nadu.

#3 Tata Semiconductor Assembly and Test

Tata Semiconductor Assembly and Test Private Limited (TSAT), was incorporated in 2022 as a subsidiary of Tata Electronics Private Limited (TEPL).

TSAT's primary objective is to set up and operate semiconductor assembly and test facilities in India. These facilities play a crucial role in the semiconductor value chain by preparing and testing the chips fabricated elsewhere (by foundries) before they reach end-users and Original Equipment Manufacturers (OEMs).

Under the Union Cabinet approval, Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) will set up a semiconductor unit in Morigaon, Assam, at an investment of Rs 270 bn.

According to the government press release, TSAT is developing indigenous advanced semiconductor packaging technologies, including flip chip and ISIP (integrated system in package).

The plant will manufacture 48 million chips per day for use in Automotive, electric vehicles, consumer electronics, telecom, mobile phones, etc.

Assam finds itself constrained to contracts and direct employment within the public sector, grappling with a notable deficit in skills-a critical concern for the much-anticipated semiconductor project.

This is Assam's largest-ever private investment and a game changer for the economy of the entire North East.

Despite the formidable reputation of the Tata Group, the project faced a prolonged period of uncertainty, with the approval for the Production-Linked Incentive (PLI) hanging in limbo for at least six months, if not longer.

The Ministry of Electronics and Information Technology (MEITY) exercised extreme caution, bordering on scepticism, regarding Assam's capabilities. This caution was well-founded, as they sought to avert any potential derailment of India's semiconductor aspirations.

This project is expected to be completed by mid-2025.

Going forward, the company plans to partner with other companies to enhance its capabilities and expertise.

How to Invest in Semiconductor Stocks

Companies in the semiconductor industry have consistently increased sales over the past 2-3 years and are expected to continue to do so amid the strong chip demand. As industries rush towards digitization, demand for semiconductors will only grow more.

So, the all-important question now is how to invest in semiconductor stocks?

At present, there are only a few companies in the world that make semiconductors.

In India, the companies involved in this space directly or indirectly are still very few. But this can change very quickly, and the right pick could be the x-factor for your portfolio.

Investors looking to invest in semiconductor stocks can:

1. Invest in companies that are building a semiconductor ecosystem in India.
2. Invest in companies have direct or indirect exposure to the semiconductor sector.
3. Invest in companies offering raw materials or design or technology services to the semiconductor industry.

The semiconductor industry is a structural megatrend in the making, so don't invest from a short-term perspective.

Keep a long-term investing approach in mind if you wish to invest in semiconductor stocks in India.

Best Semiconductor Stocks in India for Long Term Investment

You can now filter the best semiconductor stocks in India using Equitymaster's powerful stock screener.

This screener has a separate section for semiconductors, allowing investors to filter stocks that suit their needs.

Here are some of the most popular screens on semiconductor stocks on Equitymaster's stock screener -

1. Fastest Growing Semiconductor Stocks
2. Fundamentally Strong Semiconductor Stocks
3. Debt Free Semiconductor Stocks
4. Top Semiconductor Growth Stocks
5. Best Smallcap Semiconductor Stocks

In Conclusion

In conclusion, it would be safe to say that India's India's semiconductor dreams are slowly becoming a reality.

The Indian semiconductor industry stands at the cusp of transformation, poised for significant growth and influence on the global stage.

The journey towards self-reliance in semiconductor manufacturing will be challenging, but it's essential for India's economic resilience and technological sovereignty.

By reducing reliance on imports and nurturing a robust semiconductor ecosystem, India can become a pivotal player in the global semiconductor supply chain.

The Indian semiconductor industry's growth will have far-reaching implications, fostering job creation, technology diffusion, and will enhance India's position in the global tech landscape.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here.