3 Semiconductor Stocks to Watch in the Second Half of 2026

#2 Bharat Electronics

Second on the list is Bharat Electronics.

Bharat Electronics (BEL) is a Navratna defence PSU under the Ministry of Defence, and India's largest name in defence and strategic electronics.

Its portfolio spans radars, electronic warfare systems, weapon electronics, communication suites, avionics, and naval systems. Nearly 90% of its revenue comes from the defence business alone.

BEL's semiconductor story doesn't look like CG Power's. Instead of building a standalone OSAT unit, BEL is embedding chip capability directly into its defence electronics roadmap.

In June 2025, it signed an MoU with Tata Electronics to jointly explore fabrication, OSAT, and design services for its own component needs, including microcontrollers (MCUs), systems-on-chip (SoCs), and monolithic microwave integrated circuits (MMICs) used in radar and communication systems.

This isn't a bet on the commercial chip market. It's a move to indigenise the highly specialised, defence-grade semiconductors that BEL currently has to source at long lead times.

The company has since widened this push, signing a separate MoU with RRP Electronics and RRP Defence to jointly develop semiconductor devices, electro-optics, and unmanned systems, and a tripartite agreement with Metamind Systems and Kristellar Aerospace to co-develop technologies spanning semiconductors, electronic warfare, and data centers.

Taken together, these tie-ups suggest BEL is building semiconductor capability as a supporting layer under its core business, rather than as a new revenue vertical in its own right.

What makes this relevant right now is BEL's order book. It stood at roughly over Rs 730 bn, giving the company multi-year revenue visibility regardless of how quickly the semiconductor collaborations mature.

With defence indigenisation firmly a government priority and ISM 2.0 now pushing deeper into design and component manufacturing, BEL sits in a rare position.

Coming to its financials, its sales and net profit have grown at a CAGR of 13% and 24% over the past 5 years.

Its ROE and ROCE have averaged 22% and 30% during the same period.

Bharat Electronics Financial Snapshot

Its presence across the semiconductor value chain, combined with an order book that removes near-term earnings uncertainty, makes BEL a fundamentally different kind of semiconductor bet than the others on this list.

The defence-indigenisation angle also means its semiconductor push isn't discretionary spending, it's tied to government mandate, which gives it more earnings visibility than most names on this list.

For more details, check out Bharat Electronics' financial factsheet.

#3 HCL Technologies

Last on the list is HCL Technologies.

HCL Technologies is one of India's largest IT services companies, with operations spanning 60 countries and a workforce of over 227,000.

Unlike CG Power and BEL, HCL doesn't manufacture or design chips for its own products. Its semiconductor story is built entirely around servicing the global chip industry itself, an angle that makes it a very different kind of exposure to this theme.

Over the past two decades, HCLTech has built out one of the largest engineering teams in the world dedicated purely to semiconductors.

Its client roster reads like a who's-who of the global semiconductor equipment industry, including long-standing partnerships with Teradyne, Axcelis, and Eugenus, where HCL Tech engineers work on everything from automated test equipment to ion implantation and wafer processing systems.

What's notable heading into the second half of 2026 is how HCL Tech is scaling this business rather than simply sustaining it.

The company expanded its semiconductor engineering footprint with new centres in Bengaluru and Austin, and it has formalised its role with Intel as a partner in transforming the company's foundry strategy for the AI era.

Its design capabilities extend into complex ASIC, FPGA, SoC, and chiplet work, and it holds foundry-side partner status with TSMC and Arm, positioning it inside the design ecosystem rather than merely adjacent to it.

Coming to HCL's financials, its sales and net profit have grown at a CAGR of 11% and 10% respectively over the past 5 years.

The ROE and ROCE have averaged 22% and 29% during the same period.

HCL Tech Financial Snapshot

HCL Tech's edge isn't in owning silicon, it's in being indispensable to the companies that do, with deep-rooted partnerships across equipment makers, foundries, and now Intel's own foundry transformation giving it a front-row seat to where the industry is headed next.

For investors who want semiconductor exposure without the execution risk of a fab or an OSAT ramp-up, HCL Tech offers a steadier, services-led way to participate in the same structural growth story.

For more details, check out HCL's financial factsheet.

Conclusion

Strip away the noise regarding tariffs, trade skirmishes, and headlines about supply chains under siege, and semiconductors will still come out the other side looking sturdier than almost anything else in the market.

That's the part most investors miss when they're chasing the next AI headline. It's the kind of resilience by design, built over years of companies diversifying where they manufacture, who they sell to, and how much they depend on any single government staying friendly.

But all this doesn't mean the sector is risk-free. Memory pricing is famously cyclical, AI-linked demand is unevenly distributed across the value chain, and a slowdown in data-center spending would hit some players far harder than others.

But the structural story, chips as the raw material of everything from defence systems to electric vehicles to hyperscale data centers, isn't going anywhere, war or no war.

If anything, geopolitical uncertainty has made semiconductors more strategically important, which is exactly why governments across the world are throwing subsidies at domestic fabs instead of letting the market sort it out on its own.

For investors, the takeaway is to understand where the industry is genuinely insulated from macro shocks. The second half of 2026 will likely reward patience over panic and the companies with pricing power, geographic flexibility, and exposure to structural demand.

That's the real lesson semiconductors have taught the market this year: some industries don't need the world to be calm in order to grow.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Happy investing.

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