These Indian semiconductor firms are having a splendid rally on the bourses

In December 2021, the government came out with India Semiconductor Mission wherein a Rs 76,000 crore chip incentive scheme was announced under which 50 percent of the plant’s capital expenditure costs was offered as subsidy.

Indian listed companies that have a presence in the semiconductor space have seen a splendid run on the bourses even as the sector is still at a very nascent stage in the country.

Companies like HCL Technologies, Tata Elxsi, Moschip Technologies, ASM Technologies, SPEL Semiconductor, RIR Power Electronics, and CG Power have some amount of exposure in the domestic semiconductor space, which, as per studies, is estimated to grow at 19 percent CAGR.

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Interestingly, the semiconductor space is in the news globally as well since semiconductor chip manufacturer NVIDIA reported bumper quarter results on the back of a boom in demand and growth in the AI space – its stock recently crossed the $1,000 mark.

Sunny Agrawal, Head of Fundamental Research at SBI Securities believes that India is fast emerging as a global supply hub for electronics projects and says that the semiconductor space “offers significant growth opportunities across the value chain as India tries to be self-reliant for supply of chips”.

In December 2021, the government came out with India Semiconductor Mission wherein a Rs 76,000-crore chip incentive scheme was announced under which 50 percent of the plant’s capital expenditure costs was offered as subsidy.

Thereafter in March 2024, three projects received approval under this scheme: CG Power's proposed Rs 7,600-crore chip packaging facility in Gujarat’s Sanand in partnership with Japan’s Renesas Electronics; Tata Group's Rs 27,000-crore chip assembly plant in Morigaon, Assam and Tata Electronics' Rs 91,000-crore plant in partnership with Taiwan-based Powerchip in Dholera, Gujarat.

Earlier, the government had given approval for a Rs 275-crore packaging plant being set up by US-based Micron Technology. The facility is currently under construction in Gujarat.

To be sure, while there are enough growth opportunities for both companies and investors, experts say that those who are looking to invest in the segment will have to watch out for major movements and developments as the ecosystem is still evolving.

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Here are some Indian players in the semiconductor space to watch out for

HCL Technologies

HCLTech (earlier HCL Technologies) is primarily an IT services company, but it has a presence in the semiconductor industry through its engineering services. HCLTech provides a range of solutions for semiconductor companies, including chip design, verification, and software development services.

HCLTech with a market cap of Rs 3,67,484 crore has seen its shares gain around 20 percent in the last one year and around 150 percent in the last five years.

Tata Elxsi

Tata Elxsi is a design and technology services provider which provides support to the semiconductor industry through end-to-end solutions including VLSI design, verification, and software development.

While the stock has fallen 2.27 percent over the last year, it has gained nearly 8x in the last five years.

Moschip Technologies

Moschip Technologies is a semiconductor company that provides custom ASIC (Application-Specific Integrated Circuit) solutions and semiconductor design services. It caters to industries such as auto, aerospace, and consumer electronics.

The stock has gained around 117.26 percent in the last one year and around 630 percent in the last five years.

ASM Technologies

ASM Technologies provides engineering services, including semiconductor design, development, and testing, aiding in the creation of semiconductor devices and integrated systems.

The stock has gained around 2,035 percent in the last five years and around 128 percent in the last one year.

SPEL Semiconductor

SPEL Semiconductor is involved in semiconductor assembly and testing. The company provides back-end services for semiconductor manufacturing, including packaging, testing, and quality assurance.

The stock has gained around 2,043 percent in the last five years and around 211 percent in the last one year.

RIR Power Electronics

A global semiconductor company, RIR Power Electronics is involved in manufacturing of power semiconductors.

The stock has gained over 350 percent in the last one year and around 3,900 percent in the last five years.

CG Power

The company is involved in the design, manufacturing and marketing of power transmission, distribution of power products and is making its foray into the semiconductor space through its recently announced plant.

Talking to CNBC-TV18 earlier this year, the management said that they anticipate a profit before tax (PBT) margin of 10 percent from the new semiconductor assembly, testing, monitoring, and packing (ATMP) unit. They further added that it would take at least around three years to set up the entire unit before production can begin.

The plant is being set up in partnership with Renesas Electronics Corporation, Japan, and Stars Microelectronics, Thailand.

The stock has gained around 68 percent in the last one year and around 1,721 percent in the last five years.

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