India Semiconductor Industry
The report describes a transition from an import-driven market toward domestic semiconductor manufacturing, supported by government policies. It cites India’s semiconductor market at ~$ 23 Bn. in 2019, with a projected value of ~$100 Bn. By 2030 and projected CAGR growth of 16%. It identifies logic, memory, analog ICs, MCUs, discrete power devices and sensors as chip types, and says the most advanced chips operate at 2-3 nm.
| S.No. | Category | % of Total |
|---|---|---|
| 1. | Fabrication | 38% |
| 2. | Design | 30% |
| 3. | Fab Tooling | 15% |
| 4. | Assembly, Testing & Packaging (ATP) / Outsourced Semi-conductor Assembly & Test (OSAT) | 10% |
| 5. | Wafers | 2% |
| 6. | ATP Tools | 2% |
| 7. | Electronic Design Automation (EDA) | 2% |
| 8. | Intellectual Property | 1% |
The report notes that many Indian players are entering ATP/OSAT and plan to move into higher value add.
Source: CG Power Investor presentation
Key Industry Findings
- Domestic manufacturing transition: The report says government policies favor a move from an import-driven market to domestic semiconductor manufacturing.
- Different operating models: IDMs manage design through manufacturing in-house; fabless companies focus on design and outsource manufacturing to foundries.
- Value-chain concentration: Fabrication, design and fab tooling represent 38%, 30% and 15% of the value chain, respectively. ATP/OSAT represents 10%, and the report says Indian players in this area plan to scale into higher value add.
- Projects and capacity: CG Power’s OSAT and radio-frequency design venture is listed with INR 7,600 Cr. of capex over 5 years and peak capacity of 15 mupd at Sanand, Gujarat. Kaynes Technology’s OSAT project is listed with INR 3,300 Cr. of capex, Q4-FY26 DCCO and peak capacity of 6 mupd.
- Design and application opportunities: Moschip Technologies provides semiconductor ASIC design services and is developing expertise for AI / ML, IoT, automotive and smart meters. HCL Technologies is profiled in System on Chip engineering, including chip design, verification and physical design.
- Government support for OSAT in Gujarat: The report states that 50% of capital investment is from the centre and 20% from the state, leaving 30% to be funded by the company.
Selected Player Profiles
The profiles span OSAT, chip design, electronics manufacturing and silicon devices. The report distinguishes semiconductor chips, which are integrated circuits with multiple components and complex functions, from individual silicon devices used for basic functions such as switching and rectification.
| Company | Activity and details in the report |
|---|---|
| CG Power | OSAT and radio-frequency design for wireless communication and SATCOM; JV partners Renesas and Star (Japan) Microelectronics (Thailand); capex 7,600 [over 5 years]; peak capacity 15 mupd; Sanand, Gujarat. |
| SPEL Semiconductor | IC Assembly & Test; capex 600 [over 5 years], with phase1 of INR 100 Cr. (Oct’24); phase 1 peak ramp up in 12 months, with Sales: INR 150 Cr. (32% EBITDA, 19% PAT); Chennai. |
| Kaynes Technology | OSAT for power, automotive and home appliances; capex 3,300; DCCO Q4-FY26; peak capacity 6 mupd; Sanand, Gujarat. |
| IZMO | Systems in Package (SiP) for automobile applications including tyre pressure sensors; capex 10 Cr. (FY25 & FY26: 5 Cr. Each); DCCO Q4-FY25; Bangalore. |
| Dixon Technologies | IT hardware and PCBA manufacturing; the report says it has no direct semiconductor plans. Blended Co. EBITDA & PAT margins are ~3.6% & 2.2%; margins are expected to increase from IT Hardware with a time frame of 15 to 18 months (reference Sep’24 concall). |
| Tata Elxsi | Technology and software platform development, with a semiconductor opportunity in chip design and software application; India business is 19%, while Europe & US contributes ~70%. |
| RIR Power Electronics | Traditional silicon devices and a planned Silicon Carbide plant in Odisha of INR 618.6 Cr.; stated SiC market size is ~INR 350 Cr. and expected CAGR is 10.8%. |
Risks
- R&D and intellectual property: The industry’s stated constraints are weak R&D and prohibitive costs in acquiring Intellectual Property (IP).
- SPEL operating and going-concern concerns: The report calls SPEL a loss-making company in the process of restructuring internal operations and notes a qualified opinion from CA on going concern.
- RIR Power Electronics: The report says the company has no in-house R&D, has struggled with competition and Chinese dumping, and faces promoter stake selling and succession issues.
- Project uncertainty: The report says Bharat Electronics’ plan with HAL to invest INR 25,000 to INR 30,000 Cr. in an OSAT facility was announced in Late 2022, with no updates post that. Vedanta’s JV with Foxconn for a $19.5 Bn. semiconductor project was called off in Jul’23.
- Geographic exposure: For Tata Elxsi, the report notes that India business is only 19% and that Europe & US contributes ~70%, creating volatility.
Our View
The report presents domestic semiconductor manufacturing, design and OSAT as areas of activity, alongside cited market growth projections and government policy support. It also highlights significant industry constraints and varying company-level execution, financial and governance risks. No sector-wide recommendation, target price or valuation is provided.