The semiconductor industry plays a pivotal role in driving economic growth in today’s tech-centric world. 2024 marks a significant milestone for India’s semiconductor sector, with the government announcing the establishment of the first semiconductor fabrication plant in Dholera, Gujarat. The government has approved the first fab proposal, which will be developed in collaboration with Tata Electronics, a subsidiary of Tata Group, and Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC), with an investment of ₹91,000 crore.
The semiconductor industry has attracted investments totalling ₹1.26 lakh crore, including the approval last year of a packaging unit by US semiconductor giant Micron Technology in Gujarat. This year, the government also gave the green light to a proposal from Kaynes Semicon for a ₹3,300 crore semiconductor unit in Sanand, Gujarat. In this blog, let’s explore the best semiconductor stocks for Jan 2025 based on 5Y CAGR
The Indian semiconductor market is expected to grow significantly, reaching US$ 100.2 billion by 2032, fueled by the increasing demand for consumer electronics, automotive applications, and government efforts to achieve self-reliance in semiconductor production. New growth opportunities are emerging in areas such as artificial intelligence, 5G, the Internet of Things, and advanced fields like quantum computing. These sectors offer promising prospects for innovation and development, making strategic investments and collaboration with key stakeholders crucial. To unlock this potential, a solid policy framework, robust infrastructure, and a supportive environment for both domestic and international players must be established.
| Company Name | Market Cap (In ₹ Crore) | 5Y CAGR (%) |
|---|---|---|
| RIR Power Electronics Ltd | 2,213.02 | 135.95 |
| ASM Technologies Ltd | 1,620.49 | 114.19 |
| Dixon Technologies (India) Ltd | 94,950.03 | 88.62 |
| Moschip Technologies Ltd | 4,297.86 | 83.98 |
| Tata Elxsi Ltd | 41,546.75 | 52.12 |
Note: The stocks have been sorted based on 5Y CAGR and as of December 03, 2024
RIR Power Electronics Ltd is engaged in the manufacturing of traditional semiconductor devices such as bridges, power modules, diodes, rectifiers and thyristors. The company has successfully implemented projects for manufacturing high-power semiconductor devices which can manufacture products ranging up to 9,000 volts and 6,000 amperes. The company incurred a capex of ₹300 Mn at the Visicon facility and it is going to be the first Indian company to produce epitaxy for SiC wafers.
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ASM Technologies is involved in the business of providing consulting and Product development services in the areas of Engineering Services and Product R&D. During FY24, the company explored new growth opportunities and achieved expansion in both domestic and international markets. This performance reflected the company’s strategic journey to reposition itself as a unique technology solutions provider.
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Dixon Technologies (India) Limited specializes in a range of electronic products, including consumer electronics, lighting, home appliances, CCTV cameras, and mobile phones. Dixon Technologies (India) Limited has entered into a binding term sheet with vivo Mobile India Private Limited to form a joint venture for carrying out the OEM business of electronic devices including smartphones.
In Q2 FY25, the company achieved a remarkable 133% year-on-year growth in revenue, reaching ₹11,528 crore. Its profit after tax (PAT) soared by 265% to ₹412 crore, while EBITDA increased by 110% to ₹420 crore.
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Moschip Technologies Ltd is a semiconductor and system design firm specializing in Turnkey ASICs, Mixed Signal IP, semiconductor and product engineering, and IoT solutions. In Q2 FY25, the company began generating revenue from the development of high-performance computing (HPC) SoCs (System on a Chip) using advanced 5nm technology. The company’s revenue surged by 74.18% year-on-year to ₹126.63 crore, while net profit soared by 168.04% to ₹9.73 crore compared to the same period last year.
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Tata Elxsi offers a range of integrated services, from research and strategy to electronics and mechanical design, software development, validation, and deployment. Recently, Suzuki Motor Corporation and Tata Elxsi inaugurated the ‘SUZUKI-TATA ELXSI Offshore Development Center’ in Pune, India. This dedicated facility will support Suzuki’s innovations in advanced engineering and contribute to the future of mobility.
In Q2 FY25, the company’s revenue grew by 8.3% year-on-year, reaching ₹955.1 crore. However, the revenue from the Media and Communications segment declined by 2.6% quarter-on-quarter in constant currency terms, despite the business seeing promising growth opportunities driven by network transformation and AI-led services.
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Investing in semiconductor stocks in India can offer significant opportunities, but it’s essential to carefully evaluate several factors before making any decisions:
Assess the demand for semiconductors in various sectors such as consumer electronics, automotive, telecommunications, and industrial applications. India’s growing digitalisation, smart devices, and IoT market present significant growth potential for semiconductor companies.
Look for government initiatives, such as India’s Semiconductor Mission, which aims to boost domestic manufacturing of semiconductors. Government incentives, subsidies, and long-term policy support can significantly impact the growth of semiconductor companies.
The semiconductor industry relies heavily on a global supply chain for raw materials like silicon and advanced equipment. Disruptions, such as those caused by geopolitical tensions or pandemics, can impact production and profits. Evaluate how well companies manage supply chain risks.
While the semiconductor industry presents attractive investment opportunities due to its pivotal role in technological advancements, it also carries certain risks.
The semiconductor industry is expected to grow rapidly, driven by technological advancements in fields like 5G, AI, autonomous vehicles, IoT, and cloud computing. As these technologies proliferate, demand for semiconductors will likely increase, benefiting companies in the sector.
Semiconductors are the backbone of modern electronics and are used in everything from smartphones to laptops, electric vehicles, and medical devices. As global digitalization continues to expand, the demand for chips is expected to remain robust.
Many governments, including India, are investing heavily in the semiconductor industry. For example, India’s Semiconductor Mission aims to promote local manufacturing, reduce dependence on imports, and enhance global competitiveness, which could benefit domestic semiconductor companies.
Investing in semiconductor stocks can offer significant growth opportunities, driven by the increasing demand for advanced technologies such as AI, 5G, IoT, and electric vehicles. The sector is integral to the global digital transformation, and government support, particularly in emerging markets like India, could provide further growth potential.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in securities market are subject to market risks, read all the related documents carefully before investing.
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