3 Stocks to Watch as India Fast-Tracks Its Semiconductor Mission 2.0

India is gearing up to fast-track the India Semiconductor Mission 2.0 (ISM 2.0), with a cabinet note likely by October-end.

Unlike the first phase, this new version isn't stopping at just silicon fabs-it's widening its scope to cover the entire semiconductor ecosystem - compound semiconductors, advanced packaging, display fabs, capital equipment, specialised chemicals, gas suppliers, and fabless design companies.

The industry has asked the government to double the outlay to US$ 20 billion (Rs 1.76 trillion), given the rupee's depreciation and the expanded focus areas.

While the exact figure isn't confirmed, officials say ISM 2.0 will definitely surpass the earlier US$ 10 bn package under ISM 1.0.

The plan will offer tiered incentives, with the biggest subsidies reserved for large wafer fabs, and targeted support for fabless design firms and MSMEs. The goal is clear-cut reliance on imports and make India a serious player in the global semiconductor race.

With the government pushing harder on chips, here are 4 stocks to watch as India fast-tracks its Semiconductor Mission 2.0.

#1 Dixon Technologies

First on the list is Dixon Technologies.

Dixon Technologies, founded in 1993, has been the leader in the Electronic Manufacturing Services (EMS) industry. Their diversified portfolio includes products like consumer electronics, home appliances, lighting products, mobile phones, CCTVs, wearables, and refrigerators.

Their diversified portfolio includes products like consumer electronics, home appliances, lighting products, mobile phones, CCTVs, wearables, and refrigerators.

Over the years, Dixon Technologies has become synonymous with India's electronics manufacturing story. Now, Dixon is preparing to take a much bigger leap into semiconductors.

The company has lined up plans to invest nearly US$ 3 bn in a display fabrication facility in Noida, a project that could be a game-changer not just for Dixon but for India's semiconductor ecosystem.

Under ISM 2.0, subsidies could cover up to 75% of the fab's cost, making this one of the boldest bets by an Indian manufacturer in recent years.

The facility will initially focus on LED panels for Dixon's existing customer base in smartphones, televisions, and laptops, before scaling up to OLED displays used in next-generation devices.

Dixon is in talks with a global technology partner to provide the expertise needed for high-quality, large-scale production.

It's expanding its presence in components, developing camera modules, battery packs, and precision mechanicals. These moves go hand in hand with its fab ambitions, creating a more self-reliant ecosystem and reducing dependence on imports, especially from China.

With ISM 1.0 already channelling Rs 650 bn into approved projects, ISM 2.0 is expected to bring even larger incentives covering fabs, fabless design, MSMEs, and material suppliers.

For Dixon, with its scale, strong execution, and early entry into display fabs, the opportunity is immense.

By combining its established strengths in electronics with fresh semiconductor ambitions, Dixon Technologies is positioning itself not just as a contract manufacturer but as a key player in India's push to become a global semiconductor hub.

On the financial front, the company has seen steady growth over the years.

Dixon Technologies Financial Snapshot (FY21-25)

Source: Equitymaster

Over the past five years, the company's revenue and net profit have grown at a CAGR of 54.6% and 59.2%, respectively, while maintaining an average ROE of 25.2% and ROCE of 34.7%.

For more details, see the DIXON TECHNOLOGIES company fact sheet and quarterly results.

#2 Kaynes Technology

Next on the list is Kaynes Technology.

Kaynes Technology India Ltd is a leading end-to-end electronics design and manufacturing services (EMS) company, serving industries such as automotive, industrial, aerospace, defence, medical, railways, and IoT.

The company has made a significant foray into the semiconductor sector through its wholly owned subsidiary, Kaynes Semicon Pvt Ltd, focusing on Outsourced Semiconductor Assembly and Testing (OSAT) and advanced chip packaging.

At the heart of this expansion is the Sanand OSAT facility in Gujarat.

The project, with a total investment requirement of Rs 33.1 bn, has been structured with significant government support. 50% has been funded by the central government, 20% by the Gujarat government, and the remaining 30% by Kaynes.

So far, the company has committed over Rs 4 bn toward the facility. The Sanand unit is entering critical product validation trials and is expected to start commercial operations in early 2026.

Pilot operations began in April, and multi-month validation is currently underway, Kaynes Technology managing director Ramesh Kannan told the media.

It expects to begin commercial-scale deliveries to anchor customer Alpha Omega Semiconductor by October, followed by full-scale production in January 2026.

Kaynes Semicon OSAT's key contracts include a multi-year deal with Alpha Omega covering 11 packages. Supply to Alpha Omega is expected to utilise about 60% of its first-phase capacity.

Once fully operational, the Gujarat plant is projected to generate Rs 40 bn in revenue by FY30.

With ISM 2.0 set to extend incentives for OSAT, HDI, and advanced packaging, Kaynes is well-placed. Its early entry into assembly and testing aligns with the government's vision of building a complete semiconductor ecosystem in India.

The company's financial performance has consistently trended upward over the years.

Kaynes Technology Financial Snapshot (FY21-25)

Source: Equitymaster

Over the past five years, the company's revenue and net profit have grown at a CAGR of 49.2% and 99.2%, respectively, while maintaining an average ROE of 11% and ROCE of 21%.

For more details, see the KAYNES TECHNOLOGY company fact sheet and quarterly results.

#3 Moschip Technologies

Last on the list is Moschip Technologies.

The company is an Indian semiconductor and system design services company with a strong legacy in chip design, embedded systems, and product engineering.

Unlike many players that focus heavily on manufacturing, Moschip's strength lies in its design-first approach, offering end-to-end solutions across ASIC/SoC design, verification, physical design, analog, and mixed-signal design, and embedded software.

Over the years, the company has built strong relationships with global and domestic clients in industries such as automotive, consumer electronics, networking, healthcare, and industrials.

With a presence in the US as well, Moschip serves technology OEMs, auto companies, device manufacturers, and even government bodies.

Its FY25 annual report proudly notes that it's India's largest independent semiconductor and systems design services company.

What makes Moschip especially relevant today is the way India's Semiconductor Mission 2.0 is being shaped. Unlike the first phase, ISM 2.0 is set to go beyond fabs and expand support to fabless design companies as well.

This shift plays directly into Moschip's strengths. With its deep technical expertise, global client base, and proven track record, the company is well placed to take advantage of the new incentives.

The company has maintained a healthy track record of financial growth in recent years.

Moschip Technologies Financial Snapshot (FY21-25)

Source: Equitymaster

Over the past five years, the company's revenue has grown at a CAGR of 36.3%, while maintaining an average ROE of 6.5% and ROCE of 11.4%.

For more details, see the MOSCHIP TECHNOLOGIES company fact sheet and quarterly results.

Conclusion

India is no longer just a big consumer of chips. It's on its way to becoming a serious manufacturing hub in the global semiconductor chain.

The domestic chip market, worth about US$ 38 bn in 2023 is expected to hit US$ 63 bn by 2026 before crossing the US$ 100 bn mark by 2030.

Driving this shift are big government pushes like the India Semiconductor Mission (ISM), the SEMICON India Programme, and global tie-ups such as iCET.

With these efforts coming together, leading Indian semiconductor companies are gearing up to play a much bigger role in the world's chip story.

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.

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