5 Semiconductor Stocks That Could Benefit from the ₹1.28 Lakh Crore Semicon 2.0 Mission

Synopsis: The government’s Semicon 2.0 programme marks another step towards building India’s chip ecosystem. Here’s how the funds will be used and which listed companies could benefit from the initiative. 

The semiconductor industry forms the backbone of today’s digital economy, supplying the chips that power smartphones, computers, automobiles, consumer electronics, telecom equipment, artificial intelligence applications and data centres. 

As global demand for semiconductors continues to rise, countries are investing heavily to strengthen domestic manufacturing and secure supply chains. India is also stepping up its efforts through policy support and financial incentives to build a complete semiconductor ecosystem, covering chip design, manufacturing, packaging and research. 

Government Expands India’s Semiconductor Mission

The Union Cabinet has approved Semicon 2.0 with an outlay of Rs. 1.28 lakh crore, taking India’s semiconductor ambitions to the next level. The programme aims to build a complete semiconductor ecosystem, from chip design and manufacturing to research and innovation. Alongside this, the government has also approved a Rs. 62,500 crore mobile phone manufacturing scheme, highlighting its broader focus on strengthening India’s electronics manufacturing capabilities and reducing dependence on imports.

Where Will the Rs. 1.28 Lakh Crore Be Used?

The fresh allocation will be spread across different parts of the semiconductor value chain rather than focusing on a single area. A major portion of the funding will support the development of semiconductor intellectual property (IP) and chip design, encouraging Indian companies to build advanced chip technologies within the country.

The programme will also provide support for new semiconductor fabrication (fab) plants, helping India increase domestic chip manufacturing capacity. Another important focus area is research and development (R&D), which will help improve manufacturing processes, develop new technologies and strengthen India’s long-term competitiveness in the global semiconductor industry.

The funding will also encourage investments across the semiconductor ecosystem, including packaging, testing and related infrastructure, while attracting global companies to set up operations in India. Overall, the programme is designed to build a stronger and more self-reliant semiconductor supply chain.

How Does This Build on the Earlier Programme?

India launched its first semiconductor incentive programme in 2021 with an outlay of $10 billion. Since then, the government has approved 12 semiconductor manufacturing units and 24 semiconductor design projects. Semicon 2.0 builds on that progress by expanding financial support and covering more areas of the semiconductor value chain to accelerate domestic manufacturing and innovation.

Stocks to benefit

Kaynes Technology is among the strongest beneficiaries due to its expansion into semiconductor assembly, testing and packaging (OSAT) and electronics manufacturing. The company is well-positioned to benefit from government support for semiconductor manufacturing and value-added services.

CG Power is setting up a semiconductor manufacturing business through its chip fabrication venture. With fresh incentives for new fabs and semiconductor infrastructure, the company stands to benefit from higher government support and industry investments.

MosChip is one of India’s few listed pure-play semiconductor design companies. Since Semicon 2.0 places significant focus on chip design, IP development and innovation, the company could directly benefit from increased demand and incentives.

Dixon is India’s leading electronics manufacturing services (EMS) company. Apart from Semicon 2.0, it is also expected to gain from the ₹62,500 crore mobile phone manufacturing scheme, making it one of the biggest indirect beneficiaries.

Tata Elxsi provides semiconductor design, embedded engineering and product development services. As investment in chip design and advanced electronics increases, the company could benefit from higher demand for engineering and design services. 

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