Trending Semiconductor Stocks in India

The semiconductor industry has been turning heads in investing circuits for the past couple of years—all thanks to the widespread remote work culture. This popularity has only burgeoned with the arrival of groundbreaking technologies like artificial intelligence and 5G.

Based on the findings of the Strategic Investment Research Unit (SIRU), the Indian semiconductor market is projected to be valued at approximately $80.3 billion by 2028. Naturally, these figures paint an optimistic picture, beckoning investors to diversify their portfolios with semiconductor stocks in India that will likely stick around for the long haul.

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Semiconductor industry in India - A quick overview

In India, the semiconductor industry is quite significant as it is the driving force behind the expansion of the technology sector. At the moment, India depends on semiconductor imports from economies like China, Korea, and Taiwan. However, as the demand for electronics keeps soaring in the country, there is an urgency to mitigate this overreliance.

According to a report by Custom Market Insights, the Indian semiconductor industry was valued at $34.3 billion in 2023 and is anticipated to reach a valuation of $100.2 billion by 2032. This palpable increase is credited to the amplifying demand among customers for devices like smartphones, automotive parts, computers and more.

To ensure India reduces its dependence on semiconductor imports, the Ministry of Electronics and Information Technology (MeitY) has kickstarted the India Semiconductor Mission (ISM) with a generous budget of $10 billion. This plan comprises incentivising production alongside the Design Linked Incentive (DLI) scheme to support semiconductor-oriented startups. Furthermore, the Production Linked Incentive (PLI) scheme and the Make in India initiative provide concessions to establish semiconductor manufacturing units in the country.

Popular semiconductor stocks in India

To help you get started, we have listed semiconductor companies offering mid or small-cap stocks, which can be added to your watchlist. From partnerships with international players to an impressive roster of services, each of these companies has its own merits.

1. Tata Elxsi
   Besides its formidable presence in industries like auto, healthcare, media, and communications, Tata Elxsi is also a prominent player in India’s semiconductor industry. Boasting innovation in electric vehicles and semiconductor design, this multinational enterprise intends to unleash technological transformation of scale using its strategic collaborations and expertise spanning across domains.
2. ASM Technologies
   Offering a sweeping range of engineering services, ASM Technologies caters to multiple overseas markets, including Japan, the Middle East, the UK, the US, and Singapore. Automation, robotics, the Internet of Things (IoT), and driver assistance systems are some of its standout offerings. The company also specialises in product research and engineering, consulting, and development solutions.
3. SPEL Semiconductor
   This 40-year-old company is recognised as a trusted partner to several semiconductor contract manufacturers. Likewise, SPEL is the only business in the country that runs as a semiconductor IC assembly facility and a testing hub, which earns it extra brownie points among investors.
4. Moschip Technologies
   Moschip Technologies renders high-tech solutions for a variety of domains, including auto, aerospace, defence, healthcare, consumer electronics, and telecommunications. A system design and semiconductor provider, it is renowned for services like turnkey ASICs, mixed-signal IP, IoT, semiconductors, and product development.
5. Dixon Technology
   A manufacturer of consumer electronics like LED televisions, mobile phones, washers, and CCTVs, Dixon Technology has successfully tapped into the potential of semiconductor dealings in India. It recently bagged a contract with the tech giant Lenovo, securing substantial growth opportunities in the long run.
6. Ruttonsha International Rectifier
   One of the oldest power semiconductor producers in India, Ruttonsha International Rectifier is affiliated with the American-based International Rectifier. This 55-year-old brand is the only firm in the private sector that manufactures semiconductor devices right from the diffusion state.
7. Bharat Electronics Limited
   Bharat Electronics Limited (BEL) was founded by the Ministry of Defence in 1954 to cater to the needs of the Indian military force. Offering a wide range of products such as naval systems, defence communication devices, land-based radars, and avionics, BEL is now planning to venture into sectors like satellite assembly and integration, medical devices, civil aviation, and more.
8. CG Power and Industrial Solutions Limited
   Previously known as Crompton Greaves Limited, CG Power and Industrial Solutions Limited designs and operates in the power systems and industrial systems segments. In the former segment, the company produces transformers, switchgear, and reactors. In the latter, it manufactures power conversion products like drives, stamps, and machinery for railway transportation.
9. Hitachi Energy India Limited
   Hitachi Energy Company was established as a public limited company just a few years back and is renowned in the power technology industry for its energy solutions. Its popular offerings include cooling systems, circuit breakers, semiconductors, transformers, generators, and cable accessories. In addition, the company offers supplementary services like electric grid installation, asset maintenance, reparation, and more.
10. V Guard Industries Limited
    Based in Kochi, Kerala, V-Guard caters to a wide consumer base with its extensive collection of products, including consumer durables, electricals, and electronics. Some of its popular offerings include agricultural and domestic pumps, cables, distribution boards, solar water heaters, inverter and inverter batteries, mixer grinders, and gas stoves.
11. Havells India Limited
    A prominent power distribution solutions provider, Havells India Limited is known worldwide for its fast-moving electrical goods (FMCG), including cables, fans, switches, motors, home appliances, and more. Besides Havells, popular brands like Crabtree, Standard, and Lloyd come under its umbrella.

Factors to consider before investing in semiconductor stocks in India

While the semiconductor ecosystem brims with possibilities, it is still in its nascent stages in the Indian markets. This is why some thorough homework on your part is essential. Here are some key factors that will help you navigate the relatively recent scene of semiconductors, empowering you to invest in the most suitable common stocks.

1. Fiscal performance
   The first order of business should be to meticulously study the company’s overall financial health, which encompasses its revenue, profits, debt, and past achievements. Look for organisations that have a solid ROIC (Return on Invested Capital), a metric that essentially exhibits a company’s ability to earn profits from the debt or equity raised.
2. Technological prowess
   A semiconductor company is a technological entity. But ensure that the one you are investing in is generous enough with its R&D funding. You would want to own equity in an organisation that has the means to consistently invest in innovation so that it comes out on top each time a new breakthrough emerges.
3. Market conditions
   While the government diligently works to help the semiconductor domain find its foothold in India, uncontrollable factors, including industry trends, geopolitical caveats, or disruptions in the global demand and supply cycle, are assumed to influence the performance of the stocks. By monitoring these elements on a regular basis, you can safeguard your positions and stay ahead of the curve.
4. Hard evidence
   The market reach and potential make semiconductors highly appealing. Nevertheless, any impulsive buying behaviour should be avoided by exercising due diligence and avoiding hearsay. To bolster your stance, you can hire a financial advisor to help dispel any misinformation and give you a customised and fair analysis of the rewards and risks involved.

What are semiconductor stocks?

Semiconductor stocks refer to companies that design, develop, and produce semiconductors. These products are components outfitted in electronic devices, including computers and smartphones, to regulate the electricity flow. A variety of semiconductor stocks are listed on public exchanges, including companies producing microprocessors, memory chips, and other types of electronic chips. Since India’s technology sector is booming, semiconductor stocks have become vital to several investors.

Why invest in semiconductor stocks?

• It is a great time to purchase semiconductor stocks. India is undergoing a rapid digital transformation thanks to industry-wide investment in emerging technologies like 5G networks and artificial intelligence, which provides major opportunities for innovation and expansion.
• The rising demand for electronic products among the general public positively affects semiconductor production and distribution, making semiconductor stocks a potentially high-performing asset.
• The Indian government is encouraging semiconductor manufacturing with generous budget allocations and multiple incentivisation programs, which will help drive startup participation of scale.
• Investing in semiconductor stocks will allow Indian investors to effectively diversify their portfolios, making their investment strategy more resilient and robust.
• Semiconductor stocks are directly linked with global advancements and trends, which makes them dynamic assets.

How to choose the best semiconductor stocks in India to invest in?

If you are planning to purchase semiconductor stocks in India, scrutinise the factors below to make the right investment choices.

• The price of a semiconductor share is the value of one share of the semiconductor organisation. It is computed by dividing the company's total market capitalisation by the number of outstanding shares belonging to the company. Various factors can contribute to the price of semiconductor stocks, including demand, global economic factors, market trends, and recent technological advancements.
• Semiconductor stocks can be found in abundance on public exchanges. Investors should focus on key determinants, such as the company’s financial health, growth potential, past and current performance and dividends, before picking a company.
• At the same time, investors should ensure they are aware of the risks related to the semiconductor sector, including changes in global policies as well as market fluctuations.

Features of the semiconductor sector stocks in India

While browsing semiconductor stocks in India, it is important that you understand the following features of the top-performing companies. This will help you make wise and well-informed investment decisions.

• Innovation: Renowned semiconductor companies exhibit steadfastness in technological innovation. They do so by investing consistently in research and development to adapt quickly to changes and lead the charge in the semiconductor sector.
• International presence: Top-performing semiconductor companies typically have a solid presence in other parts of the world. Their global footprint is evidence of their burgeoning growth and key affiliations with multinational players.
• Strategic partnerships: Semiconductor companies have to collaborate with different technology businesses to ensure expansion and exchange of resources. A top-performing semiconductor company will have strong alliances with other reputed companies in domestic—and overseas markets.
• Financial performance: A reliable semiconductor organisation always demonstrates healthy financials, including seamless revenue channels, consistent gains, and respectable debt levels.
• Strong supply chain: Supply chains in a semiconductor company play the most critical role in its performance. A supply chain that is well-stocked and prepared for unexpected curveballs will ultimately be the one meeting market demands in a time of semiconductor scarcity.

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Conclusion

With the digitalisation of our everyday lives, it is undoubtedly an exciting time to invest in semiconductor stocks in India. They can advantageously diversify your portfolio and can offer you sizable long-term returns. While the fascination with semiconductors is understandable, technology is also vulnerable to the dynamic effects of regulation, politics, culture, and competition. So rely on robust facts and solid advice, and keep an eye out for trends and fluctuations to ensure your investment in semiconductors works in your favour.