Are Semiconductor Stocks Back in Focus for Long-Term Bets in India?

The Indian semiconductor sector is capturing renewed attention from long-term investors in 2025, driven by strong structural drivers, government policy, and an expanding role in the global technology supply chain. In this blog, we will explore why semiconductor stocks in India are regaining their prominence for long-term portfolio allocations.

Why Semiconductor Stocks are Back In Action?

Several factors are driving growth in semi conductor stocks. Some of those are listed below:

1. Surging Domestic Demand

India’s rapidly expanding digital economy, driven by widespread smartphone adoption, accelerated 5G rollout, booming electric vehicle (EV) market, and increasing adoption of IoT devices and AI applications, translates into an exponential demand for semiconductors within the country.

By 2030, the semiconductor market in India is expected to have grown from $54 billion in 2025 to over $108 billion. This growing internal market provides a crucial foundation for the success of undervalued stocks involved in domestic semiconductor manufacturing.

2. Government Push and Policy Support

The Indian government aims to build a complete semiconductor ecosystem from design to manufacturing. For this, the Indian government has demonstrated unwavering commitment through the India Semiconductor Mission (ISM) with a substantial outlay of ₹76,000 crore (approximately $9.5 billion).

It also includes Production Linked Incentive (PLI) schemes offering significant fiscal support (up to 50% of project cost for fabs) for setting up manufacturing, assembly, testing, marking, and packaging (ATMP) units, and Design Linked Incentive (DLI) schemes for chip design. This strong policy backing is attracting both domestic and global players.

3. Global Supply Chain Diversification

Geopolitical tensions and recent supply chain disruptions have highlighted the urgent need for diversification in the global semiconductor supply chain. India is strategically positioning itself as a reliable alternative to traditional manufacturing hubs.

Indian companies are forming international partnerships and signing Memorandums of Understanding (MoUs) with countries like the USA, EU, Japan, and Singapore to bring advanced technology and investment to the semiconductor industry in India.

4. Robust Capital Expenditure and Financial Performance

The semiconductor sector in India is witnessing strong capital commitments, with multiple companies showing triple-digit revenue growth and expanding their operating margins. Market leaders with strong financials and innovation pipelines are expected to outpace both sector and broader market benchmarks. Consistent capital expenditures (CapEx) to increase manufacturing capacity and invest in advanced research and development (R&D) further support this financial strength.

5. A Deep Pool of Design Talent

India has been a global hub for semiconductor design. A significant portion of the world’s chip design workforce is based in India, with numerous multinational corporations having their R&D centers here.

This existing expertise in Electronic Design Automation (EDA) and chip design provides a strong competitive advantage, allowing India to transition from manufacturing to the production of high-value intellectual property. This talent pipeline is being further supported by the ‘Chips to Startup’ (C2S) program.

Ambitious “Fab” Ambitions

India is committed to establishing these essential manufacturing facilities, even though setting up a fabrication facility (or “fab”) is extremely difficult and expensive. The authorized projects are being implemented in different stages, and the government is looking into further incentives, such as a proposed $15 billion second phase of the semiconductor manufacturing incentive policy that would concentrate on advanced fabrication.

Conclusion

Semiconductor stocks in India are back in focus for long-term investors. Due to strong policy momentum, exceptional demand growth, domestic self-reliance initiatives, and the evolving participation of proven and new-generation companies. India’s semiconductor journey is at a transformational but early stage. For investors with a long-term horizon and high-risk appetite, this sector could become one of the biggest wealth creators of the next decade.