Chip is the new oil! Jefferies expects India to quadruple electronics production to Rs 500 billion by 2030—Key stocks to watch

Jefferies estimates that India’s electronics production will reach Rs 500 billion by 2030, driven by increasing investments in semiconductor manufacturing. The firm highlighted that Rs 18 billion is currently being invested in a chip fabrication plant and four OSAT/ATMP projects.

Jefferies also noted that "chip is the new oil", emphasizing its growing strategic importance. The firm believes India has strong potential to replicate its success in the automotive sector within semiconductors, as the ecosystem continues to expand.

India’s Semiconductor Push

Semiconductors, crucial for defence, automotive, and telecommunications sectors, have emerged as significant factors in the geopolitical arena. Countries like the US, Japan, and China are heavily investing in building domestic capabilities in this critical technology.

India is making significant strides in semiconductor manufacturing through the India Semiconductor Mission (ISM), launched in December 2021 with Rs 76,000 crore in funding. Key projects include Micron Technology’s $2.75 billion assembly and test facility in Sanand, Tata Electronics’ fabrication unit in Dholera, and CG Power’s unit in Sanand.

A semiconductor plant has also been approved in Morigaon, Assam. The government’s Production-Linked Incentive (PLI) scheme further supports domestic chip manufacturing.

India’s first ‘Made in India’ semiconductor chip is expected by 2025, marking a key step toward self-reliance. Global firms like NXP Semiconductors and Lam Research have committed over $1 billion each to boost India’s semiconductor ecosystem. Additionally, Israel’s Tower Semiconductor and Adani Group are working on a $10 billion chip project, reinforcing India's growing role in the global semiconductor industry.

Semiconductor Stocks to Watch

Tata Group: Through Tata Electronics, the group is investing $14 billion in a semiconductor fabrication plant in Gujarat and an assembly and testing unit in Assam. Tata is also in talks with Analog Devices to manufacture semiconductor products in India.

Larsen & Toubro (L&T): Its semiconductor unit, L&T Semiconductor Technologies, launched in November 2023 with a $100 million investment. It focuses on automotive chip design and plans to set up a manufacturing facility.

Cyient: The company recently expanded its semiconductor business by launching a fully owned subsidiary. Krishna Bodanapu, Vice Chairman and MD of Cyient, stated that with the global semiconductor market projected to hit $1 trillion by 2030, India is well-positioned to capitalize on this growth.

HCL Technologies: The IT major is engaged in semiconductor design and engineering services, contributing to India’s chip ecosystem.

Dixon Technologies (India): Expanding into semiconductor manufacturing to cater to growing demand in consumer electronics.

Tata Elxsi: Provides semiconductor design services for industries like automotive and consumer electronics.

Vedanta: Vedanta also announced significant projects to enter semiconductor manufacturing, aiming to contribute to India’s chip-making capacity.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)