The trillion-dollar chip wars have opened a rare window of opportunity for India. Semiconductors are no longer the hidden chips in devices — they are the backbone of automobiles, telecom, defence, and factory automation.
India does not have mega-fabs as in Taiwan or Korea. But it does have strong engineering strength in chip design and emerging capabilities in testing and packaging. These are the entry points from where India can progress the fastest.
At the Semicon India 2025 summit, Prime Minister Narendra Modi, in his remarks published on pib.gov.in, said India is building a strong semiconductor ecosystem and that “the day is not far when India’s smallest chip will drive the world’s biggest change.”. Prime Minister Modi announced that the second stage of the India Semiconductor Mission (ISM 2.0) will speed up reforms and promote innovation.
In the initial stage alone, deals worth Rs 1.6 trillion have already been sanctioned in six states. Global chipmakers are paying attention, with most anticipating that India will be a central part of the industry’s future thanks to encouraging policies and a robust talent pool.
Capitalizing on this wave of momentum, New Delhi has introduced DLI 2.0 (Design Linked Incentive). Unlike previous general PLI schemes, this one is more focused and sharper. The incentives are for semiconductor chipsets powering 25 categories of consumer electronics — the microcontrollers, connectivity chips, and power ICs within TVs, fridges, telecom equipment, and internet of things (IoT) products.
With local sourcing regulations in place, companies are encouraged to use semiconductors designed and packaged within India. This generates direct business for indigenous design houses and packaging companies.
For investors, this is where the universe converges. India does not yet have either a TSMC or a Samsung. But what it does have is a few listed players situated precisely where the incentives and mandates are moving. Design incentives bring focus to chip IP and VLSI expertise.
Packaging support favours the few with ATMP (Assembly, Testing, Marking, and Packaging)/OSAT (Outsourced Semiconductor Assembly and Testing) visibility. With local sourcing, demand flows their way. These four companies are among the clearest bets on the semiconductor sector in India right now — most directly in line with the intent of the policy. But are they still cheap?
Let’s dig in and find out more…
#1 Moschip Technologies
Moschip Technologies is a semiconductor and system design company with a focus on Turnkey ASICs, Mixed Signal IP, semiconductor & product engineering, and IoT solutions catering to aerospace & defence, consumer electronics, automotive, medical and networking & telecommunications.
MosChip Technologies is solidifying its position as a top-notch semiconductor design and services contender. The Hyderabad-based company, India’s first listed fabless semiconductor corporation, has done over 200 SoC tape-outs and grown its capabilities from 180nm all the way down to 2nm process nodes.
The firm designs and manufactures custom semiconductor chips (ASICs) right through to production. It also constructs pre-designed chip blocks (IP cores) employed in connectivity and mixed-signal applications. In addition to this, MosChip offers chip design services to clients all over the world, assisting them in developing and testing complex semiconductors.
During FY25, the company progressed on a number of strategic initiatives. It is building a Smart Energy Meter IC under the government’s Design Linked Incentive (DLI) program for domestic as well as overseas markets. MosChip also collaborated with C-DAC and Socionext to jointly develop the AUM processor, a high-performance computing SoC on 5nm technology as part of India’s National Supercomputing Mission. Concurrently, the company enabled RISC-V based CPUs and GPUs through its design collaboration with Tenstorrent.
Looking ahead, MosChip intends to enhance cooperation with international foundries and IP providers to attain early access to state-of-the-art tools and reusable IP in order to accelerate time-to-market for advanced ASICs. Reaching 59% growth in revenue in FY25 on the back of turnkey ASIC and IP services, the company seems poised to contribute more meaningfully to India’s semiconductor agenda.
#2 Tata Elxsi
Tata Elxsi – a Tata Group company, is amongst the world’s leading providers of design and technology services across industries including Automotive, Media, Communications and Healthcare.
Tata Elxsi is continuously expanding its engagement in the semiconductor value chain by integrating design prowess with domain platforms. The company has established itself as a technology partner for worldwide chipmakers by investing in software-defined platforms and digital labs to build a stronger foothold in this important industry.
The company offers solutions that ranging from chip design support to embedded software and system integration. Its semiconductor business crosses automotive, aerospace, and healthcare end-markets, where software-defined cars, battery management, and connected platforms are defining next-generation demand. Tata Elxsi also partners with chipmakers and OEMs to develop test automation frameworks and AI-based platforms, bridging the end-to-end gap between hardware development and end-market products.
In FY25, Tata Elxsi grew semiconductor engagements through collaborations with Emerson (National Instruments), Qualcomm, among others, and expanded its 5G and test automation labs in Bengaluru and Frankfurt. These developments strengthened its chip-linked design and validation credentials.
In the future, the organization wants to concentrate its semiconductor-driven solutions in EVs, drones, robotics, and aerospace. By combining design-driven capabilities with AI, Tata Elxsi hopes to enhance the speed of innovation cycles and minimize development risks for international semiconductor customers, basing its own growth on the rapidly changing electronics market.
#3 L&T Technology Services
L&T Technology Services (LTTS) is an engineering services provider incorporated in 2012, offers engineering, research and development (ER&D) and digitalization solutions to companies in the areas such as Transportation, Industrial Products, Telecom and Hi-Tech, Medical Devices and Plant Engineering. It is a L&T Group company.
LTTS is intensifying its concentration on the rapidly growing semiconductor space, boosted by increasing worldwide demand for chip design, testing and system integration. Semiconductors are a high-priority pillar in the company’s Tech segment, which is now among its biggest growth drivers.
At the center of its semiconductor business, LTTS provides silicon engineering capabilities, such as chip design, verification, and platform engineering. It also delivers services for complex device integration and VLSI capabilities, allowing its global customers to expedite product development. These strengths enable LTTS to function across the value chain — from concept to tape-out — and cater to industries like automotive, telecom, and industrials.
Over the last year, the firm consolidated its positioning by boosting partnerships and investing in domain-specific centres. The upsurge in demand in domains such as software-defined products, 5G deployments, and high-performance electronics has been driving growth, with the semiconductor domain itself seen to grow 9–10% worldwide by 2030, a growth trend LTTS is actively leveraging.
In the times to come, LTTS is positioning itself in the government’s thrust for electronics manufacturing and greater off-shoring to India. Having over 1,500 patents filed in aggregate and a robust position in AI and GenAI, the firm intends to use its strength here to further entrench its semiconductor play across chip innovation, embedded systems, and next-gen design services.
#4 Kaynes Technology
Incorporated in 2008, Kaynes Technology is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturing company. The company provides conceptual design, process engineering, integrated manufacturing, and life-cycle support for major players in the automotive, industrial, aerospace and defense, outer-space, nuclear, medical, railways, IoT, Information Technology and other segments.
Kaynes Technology India is aggressively moving into the semiconductor value chain with the aim of developing capabilities in outsourced semiconductor assembly and test (OSAT) and high-density interconnect (HDI) printed circuit boards. The company is positioning itself as the sole indigenous player that brings EMS, PCB fabrication, and semiconductor packaging together on one platform.
Currently, Kaynes is building a greenfield OSAT factory in Sanand, Gujarat, that will process 6.3 million chips per day. The plant will specialize in advanced packaging — a high-margin space that’s vital for fabless chipmakers and integrated device manufacturers. The company is also establishing an HDI PCB factory in Tamil Nadu, which will cut India’s 90% import reliance in this space.
The semiconductor business of the company goes beyond building capacity. It is collaborating with IIT Bombay to jointly develop packaging intellectual property, and entering into tie-ups with global OSAT companies to introduce global know-how into its Indian operations. These initiatives are being facilitated by incentives through the Production Linked Incentive (PLI) and India Semiconductor Mission (ISM) schemes.
In the future, Kaynes anticipates that its OSAT business will account for almost 30% of group revenues in the next 4–5 years, with FY26 scheduled for commercial rollout. Its packaged play in packaging, PCBs, and EMS is expected to fortify local supply chains and capture a part of the booming global semiconductor backend market.
Valuations
Let’s now take a look at the valuations of these companies, using the Enterprise Value to EBITDA metric.
Valuation Comparison
| Sr No | Company | EV/EBITDA | 10-year median EV/EBITDA | ROCE |
| 1 | Moschip Technologies | 74.0 | 34.5 | 11.9% |
| 2 | Tata Elxsi | 31.4 | 25.0 | 36.3% |
| 3 | L&T Technology Services | 21.6 | 20.4 | 28.3% |
| 4 | Kaynes Technology | 85.8 | 68.1 | 14.3% |
Semiconductor valuations have risen far above historical levels. On an EV/EBITDA basis, the four companies are all higher than their respective 10-year medians. This reflects the wider rerating of the sector, driven by worldwide chip shortages, government subsidies, and increasing investor demand for design and packaging plays.
Return on capital employed (ROCE) points to the gap. Tata Elxsi and LTTS have healthy returns of 36.3% and 28.3% respectively, indicating optimal use of capital. MosChip and Kaynes at 11.9% and 14.3% have poorer return profiles though they carry the highest multiples.
As demand tailwinds, regulations on local sourcing, and government incentives account for the sector’s rerating, investors must question if these valuations provide sufficient room for upside. History shows that best opportunities emerge when growth opportunity is available at sensible prices.
Investor Takeaway
India’s semiconductor journey is unmistakably gaining momentum with policy backing under DLI 2.0, increasing domestic capabilities, and increased global interest. The four companies mentioned are better-positioned in design and packaging — the very spaces where India can proceed at its quickest speed. Yet, investors need to be aware of potential pitfalls.
OSAT and high-end packaging facility installations involve high initial capital spend, project timelines can get delayed, and competition from international incumbents is fierce. On the demand side, the industry is cyclical, aligned closely with consumer electronics and telecom cycles, which can induce fluctuations.
Valuations are also high, with multiples significantly above historical levels, suggesting that part of the growth story may already be priced in. While the long-term story is enticing, near-term threats of high capital requirements, world supply shocks, and extended valuations cannot be overlooked.
Investors would be well-advised to balance both the prospects and the threats before allocating in India’s semiconductor sector.
Disclaimer
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep deep into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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