The global AI infrastructure buildout is driving unprecedented demand for semiconductors. While India doesn't have chip fabs yet, several listed companies are positioned to benefit from this megatrend. Here's our analysis.
The Global AI Chip Boom
AI chip demand is expected to grow at 35% CAGR through 2030. Nvidia, AMD, and now custom chips from hyperscalers are driving this growth. Data center capex by big tech is at record levels, with $200B+ expected in 2026 alone.
India's Opportunity
- Semiconductor packaging and testing: Lower capex entry point
- ATMP (Assembly, Testing, Marking, Packaging): Several MNCs setting up
- Electronics manufacturing: EMS companies riding the PLI wave
- Design services: Strong talent pool for chip design
- Materials and chemicals: Specialty chemical suppliers to chip industry
Investment Ideas
We identify three categories of beneficiaries: (1) Direct plays—companies entering semiconductor packaging, (2) Indirect plays—electronics manufacturers benefiting from localization, and (3) Enablers—companies providing materials or services to the industry.
Key Risks
India's semiconductor ambitions are still early stage. Execution delays, technology gaps, and global competition are real risks. Many stocks have already re-rated on expectations—actual revenue contribution remains small.
Our View
This is a 5-10 year structural theme. Don't chase expensive momentum plays. Focus on companies with real capabilities and order book visibility. The Tata semiconductor fab and Micron's ATMP facility are key catalysts to watch.