India’s Semiconductor Market Set for ₹80.3 Billion by FY28 with Kaynes and ABB Positioned for 20%+ Gains

India’s semiconductor industry is on the brink of rapid growth, thanks to new government programs and increasing domestic demand. Ajit Manocha, CEO of SEMI, recently highlighted India’s potential to become a global semiconductor leader. With projected growth of nearly 20% annually, India’s semiconductor market could reach ₹80.3 billion by FY28, while the global market aims for $1 trillion by 2030.

The demand for semiconductors is being driven by three major tech trends: the expansion of IoT (Internet of Things), the rise of AI, and advancements in 6G and quantum technology. Initiatives like the India Semiconductor Mission (ISM) are attracting foreign investment, with ISM 1.0 already drawing interest and the upcoming ISM 2.0 set to boost support further. The government has committed ₹760 billion to the ISM program and recently announced 50% financial support for companies building semiconductor facilities, pushing investments to over ₹1.5 trillion.

Some key projects include Micron’s OSAT (Outsourced Semiconductor Assembly and Test) center in Gujarat and Tata Electronics’ new high-tech fab in Dholera, expected to produce 50,000 wafers monthly. Tata is also establishing a large chip assembly and testing facility in Assam, aiming to produce 48 million chips daily. Although India still imports materials like silicon carbide and gallium arsenide, local companies are stepping up to strengthen this part of the supply chain, essential for India’s semiconductor success.

Manocha emphasized that India has significant design expertise, accounting for 20% of global design houses. Now, the focus is on expanding manufacturing capabilities, even though production costs in India are about 30% higher than in Taiwan and Southeast Asia. India’s talent pool of engineers, however, is seen as a major advantage, with a forecast of one million new semiconductor jobs by 2030.

For investors, Kaynes Technology and ABB appear well-positioned to capitalize on India’s semiconductor boom:

• Kaynes Technology: Target Price: ₹6,400 (Current: ₹5,300, 20% Upside)
  • Kaynes has formed strategic partnerships to diversify its offerings and drive growth, expecting a 67% CAGR in PAT from FY24 to FY27 due to strong demand.
• ABB: Target Price: ₹9,500 (Current: ₹7,525, 26% Upside)
  • ABB is tapping into rising demand in the FMIG (Factory Motion and Industrial Goods) segment, where pricing strength should keep profit margins high for several years.

With strong government backing, an expanding talent base, and favorable market conditions, India’s semiconductor journey is set to make an impact globally, offering investors promising growth opportunities.