Top semiconductor stocks in India | Semiconductor Value Chain | Sahil Bhadviya SEBI RA

Summary

India is embarking on an ambitious journey to become a global semiconductor hub. While the country excels in chip design, contributing 20% of global engineers, it currently lacks advanced fabrication facilities. The government’s $10 billion semiconductor mission, combined with private sector initiatives from companies like Tata, CG Power, and CAN Technology, aims to build fabs, ATMP plants, and a complete ecosystem. Challenges include high capital costs, technical precision, talent gaps, supply chain dependence, and global competition. Investors are advised to focus on fundamentally strong companies, proxy players, and long-term growth, recognizing that India’s semiconductor story is a marathon, not a sprint.

Takeaways

• 💡 Semiconductors are the backbone of modern technology, powering everything from smartphones and laptops to cars and satellites.
• 🇮🇳 India currently imports nearly 100% of advanced chips and lacks large-scale fabrication (fabs) and ATMP facilities, but has strong semiconductor design talent.
• 👩‍💻 Around 20% of global semiconductor design engineers are Indian, contributing significantly to global chip architecture and R&D.
• 🏗️ The semiconductor value chain has four stages: design, fabrication, assembly/testing/packaging (ATMP), and system/software integration.
• 🏭 India’s first major commercial fab, Tata PSMC in Gujarat, aims to produce 28–65nm chips, marking a significant step in domestic fabrication capabilities.
• 🔧 India is gaining momentum in ATMP through companies like SPEL Semiconductor, CAN Technology, and CG Power, which help bridge design and finished chip production.
• ⚙️ Proxy opportunities exist in chemicals, specialty gases, equipment, precision tools, and EMS/software integration companies that support the semiconductor ecosystem.
• ⚠️ Key risks for India include execution and yield challenges, high capital intensity, technology obsolescence, supply chain dependence, talent gaps, geopolitical issues, demand-supply mismatches, policy and bureaucracy risks, competition, and ecosystem fragmentation.
• 📈 Semiconductor investments are capital-intensive and cyclical; investors should focus on companies with strong fundamentals, strategic positioning, and ecosystem proxies rather than hype or story stocks.
• ⏳ India’s semiconductor journey is a long-term process; patience, selectivity, and understanding risks are crucial for sustainable growth and investment success.

Q & A

Why are semiconductors considered crucial for the 21st century?

Semiconductors power almost every modern electronic device, from smartphones and laptops to cars, appliances, and satellites, making them essential for technological and economic growth.

What is India's current position in the global semiconductor industry?

India imports nearly 100% of the advanced chips it consumes and lacks large-scale fabrication facilities. However, India has a strong presence in semiconductor design, with around 20% of global design engineers working in the country.

What are the four main stages of the semiconductor value chain?

The four stages are: 1) Design – creating the chip blueprint; 2) Fabrication – manufacturing the chip on silicon wafers; 3) Assembly, Testing, and Packaging (ATMP) – cutting, packaging, and testing chips; 4) System and Software Integration – embedding chips into devices and writing software to control them.

Which Indian companies are active in semiconductor design and R&D?

India hosts major R&D centers for global companies like Intel, Qualcomm, Nvidia, AMD, and MediaTek. Domestic players include MosChip Technology and groups under Tata, contributing significantly to design expertise.

What is India’s current status in semiconductor fabrication?

India currently has minimal commercial fab experience. Tata Technology is planning an $11 billion fab in Gujarat to produce 28–65nm chips by 2027, marking the first large-scale commercial fabrication effort in the country.

Which companies are contributing to India’s assembly, testing, and packaging ecosystem?

Companies like CAN Technology, SPEL Semiconductor, and CG Power (in a joint venture) are involved in ATMP, providing critical capabilities between wafer fabrication and chip integration into devices.

What are the main risks for India’s semiconductor industry?

Key risks include execution and yield risk, capital intensity, technology obsolescence, supply chain dependency, talent gap, geopolitical and trade risks, demand-supply mismatch, policy and bureaucracy challenges, global competition, and ecosystem development risk.

Why are proxy companies important in India’s semiconductor ecosystem?

Proxy companies provide critical inputs like chemicals, specialty gases, precision equipment, and software integration services. They benefit from ecosystem growth without directly manufacturing chips, offering lower execution risk for investors.

What challenges does India face regarding technology advancement in semiconductors?

India is focusing on mature 28–65nm nodes, whereas the global industry is moving toward 3–2nm nodes for AI, high-performance computing, and next-generation devices, creating a risk of technological obsolescence.

What should investors consider when looking at the Indian semiconductor sector?

Investors should prioritize companies with strong fundamentals, clear revenue visibility, and strategic positioning. Proxy companies in chemicals, precision tools, EMS, and software integration offer growth exposure with lower risk. Blindly chasing hype or overvalued stocks should be avoided.

How does India’s semiconductor journey compare to Taiwan and South Korea?

Taiwan and South Korea built entire semiconductor ecosystems over decades, including fabs, R&D, suppliers, logistics, and universities. India is in early stages, and isolated projects without a full ecosystem may face higher costs and lower competitiveness.

What role does the government play in India’s semiconductor mission?

The government launched the India Semiconductor Mission with a $10 billion incentive push, approving new units and providing policy support to encourage domestic fabrication, design, ATMP, and ecosystem development.