Foreign investors bet big on India’s semiconductor dream: Decoding FII & DII activity and emerging opportunity

Semiconductors, the tiny chips powering everything from smartphones to fighter jets, have become a strategic battleground in the global economy. With demand for these critical components soaring, India is positioning itself to grab a slice of the pie, and foreign investors are taking notice.

Global Semiconductor Outlook

The global semiconductor outlook reflects a positive trend, with a surge in chip stocks, driven by high-end chip demand for AI applications. Despite challenges, including US restrictions, China notably acquired Nvidia semiconductors. Signs of a global chip demand upswing emerged, with semiconductor sales worldwide rising for the first time in over a year, buoyed by emerging technologies like AI.

India’s Semiconductor Ambitions

Recognizing the strategic importance of semiconductors, the Indian government has launched initiatives like the Production-Linked Incentive (PLI) scheme to attract investments and boost domestic production. This proactive approach, coupled with India’s young workforce and growing digital infrastructure, is making the country an attractive destination for chipmakers.

Domestic Semiconductor Momentum

India is witnessing a significant surge in semiconductor-related initiatives. Major players like Foxconn, HCL, Tata, and Infosys are making substantial strides. Foxconn and HCL are set to establish semiconductor facilities, Tata has already established one in Dholera, and Infosys has acquired Insemi Technology Services for Rs 280 crore, reinforcing the nation’s semiconductor prowess. The strategic MoU between Amber Group and Korea Circuit further fortifies PCB manufacturing in India.

FII & DII Confidence in Indian Semiconductor Companies

Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have demonstrably increased their holdings in Indian semiconductor companies over the past year. This surge in investor confidence reflects the sector’s promising outlook.

The table below highlights the increase in FII and DII holdings in some key companies:

 India’s Semiconductor Future: A Global Player in the Making?

With government support, private investments, and increasing investor confidence, India is well-positioned to become a major player in the global semiconductor industry. While challenges remain, the potential rewards are significant, not just for the economy but also for national security and technological self-reliance. As the global chip race heats up, India’s journey in the semiconductor space promises to be an exciting one to watch.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.