India semiconductor push gathers pace; Equirius flags full-stack transition

Analysts at Equirius Securities believe India is entering the next phase of its semiconductor journey, transitioning from being primarily a chip design hub to developing full-stack capabilities spanning fabrication, packaging, and testing.

In a report, analysts Harshit Patel and Sanyam Jain said India, long home to one of the world’s largest pools of chip design engineers while importing nearly all semiconductors it consumed, is now building domestic manufacturing capabilities amid a global realignment of semiconductor supply chains.

According to the brokerage, the global semiconductor market is projected to grow from around $775 billion to $1.6 trillion by CY30. A geopolitical reordering of chip manufacturing has positioned India as a trusted partner, a status made explicit by its accession to Pax Silica in December 2025.

The brokerage said this has triggered India’s most serious industrial mobilisation in the semiconductor space, supported by central and state policies, semiconductor fabrication plants, packaging facilities, an emerging fabless design ecosystem, and an upstream materials ecosystem still in its early stages.

A global reset has opened the door

According to analysts, semiconductors have been recast from tradable components into critical national infrastructure, a vulnerability exposed by the CY21 shortage and further magnified by the AI build-out.

More than $600 billion of incentives announced since CY22 across the US, EU, Japan, Korea, China, and India are steering new capacity away from a supply chain where Taiwan still produces over 90 per cent of leading-edge logic. The demand pull, they said, remains strong, with the top five hyperscalers lifting capex toward roughly $700 billion in CY26, largely routed through the same narrow supplier base.

Policy now spans the full stack

Analysts said India’s semiconductor policy now spans the full value chain. The India Semiconductor Mission (ISM) funds fabs and packaging at a 50 per cent central subsidy, while the ECMS supports the components and materials layer, and DLI and C2S support design start-ups and university talent. Budget FY27’s ISM 2.0 further adds support for equipment, IP, and skilling, they said.

According to Equirius, execution has followed, with 12 approved units carrying over US$21 billion in investments. Micron’s Sanand ATMP, Kaynes Semicon’s Sanand OSAT and CG Semi’s pilot line are operational, while the US$11 billion Tata PSMC fab at Dholera targets first chip output by December 2026.

“A pari passu subsidy that co-invests from day one, along with state support reaching 60–75 per cent of project cost, has moved the pipeline faster than most Western programmes,” said the analysts.

India building on core strengths

According to analysts, India is building where its advantages are strongest. The country has around three lakh chip designers, roughly a fifth of the global pool and second only to the US. These engineers are involved in architecture, verification and tape-outs, including a 2nm tape-out by Qualcomm’s India teams.

ISM, they noted, is focused on OSAT and mature nodes of 28–110nm, which account for about 56 per cent of global wafer capacity and serve automotive, industrial and consumer applications that dominate India’s chip demand. Assembly costs in these nodes are significantly lower than Taiwan, they added.

Demand-led import substitution, they said, underpins the opportunity, with chip consumption expected to more than double to around US$155 billion by CY31.

CG Power, Kaynes offer listed exposure

In India, CG Power, and Kaynes Technology, through CG Semi and Kaynes Semicon, are the two listed companies with direct exposure to semiconductor manufacturing.

The brokerage, however, has ‘Reduce’ ratings on both stocks, with target prices of ₹875 for CG Power and ₹3,112 for Kaynes Technology.

Execution remains key risk

According to Equirius, India will continue to import more than 90 per cent of its semiconductor equipment, along with most specialty chemicals and gases. The absence of leading-edge manufacturing below 7nm and execution risk remain key constraints.

The brokerage said India is synthesising elements of successful Asian semiconductor models, including government-seeded research from Taiwan, domestic champions from Korea, and FDI anchors from Malaysia and Singapore, while remaining open in contrast to China’s closed model.

“This is roughly year five of a twenty-year build, and represents the most favourable entry any economy has had since Malaysia opened Penang in 1972,” said the brokerage. ======================================================

(Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers’ discretion is advised.)

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