2026: The Realization of India's Semiconductor Dream, A Gateway to New Opportunities for IT Portfolios

Period: 2026-01-19 — 2026-01-25 | Sources analyzed: 24 | Avg. relevance: 8.3/10

Bottom Line

According to government confirmation, India will commence commercial semiconductor chip production as early as 2026, involving four plants and attracting up to $90 billion in investment. Investors should immediately focus on increasing exposure to semiconductor manufacturing, equipment supply chains, and the supporting hardware ecosystem. This shift will redefine long-term portfolio allocation.

Key Developments

1. Commercial Semiconductor Production in India to Begin by February 2026 — Union Minister Vaishnaw announced at Davos that the country's first commercial chip fabrication unit will start production by the end of February 2026, and trial production has already begun at one of the four approved plants. Portfolio implication: Increase investment in companies directly linked to the semiconductor mission (e.g., partners of proposed fabs) and in downstream industries like displays, automotive, and electronics. Focus on firms supplying capital goods.

2. Strategic Collaboration with ASML to Boost Dholera Plant — Railway Minister Vaishnaw visited the headquarters of ASML in the Netherlands, a leading manufacturer of chip-making equipment, to accelerate technical collaboration. Portfolio implication: Identify ASML's Indian partners or suppliers. This development ensures access to high-quality lithography equipment, enhancing the technical credibility of Indian fabs and creating investment opportunities in related engineering services.

3. Work on 12 Indigenous AI Models, Four to Launch Soon — The government confirmed that 12 artificial intelligence models are being developed in the country, four of which will be launched shortly, while IT companies are rapidly adopting AI. Portfolio implication: Select securities in companies shifting from traditional IT services to AI-focused solutions and platform businesses. Increase research on domestic software firms engaged in AI-based product development.

4. Target of $1.3 Trillion in Exports by 2035, Semiconductor a Priority — According to a report, India aims to nearly triple exports to $1.3 trillion by 2035 through manufacturing-led growth, with high-end semiconductors being a key sector. Portfolio implication: Take long-term positions in export-oriented electronics manufacturing and design companies (EMS/ODM). This target signals continued support for export incentive schemes (PLI, etc.).

5. Indian Mobile Brand Expected in Market Within 12-18 Months — Minister Vaishnaw announced that an Indian mobile phone brand will emerge in the market within the next 12-18 months, reflecting the maturity of the country's electronics manufacturing ecosystem. Portfolio implication: Evaluate domestic companies involved in mobile assembly, component making, and branding. This is a significant step towards reducing import dependency and strengthening the domestic value chain.

Sector Pulse

Risk Watch

• Delays in Technology Transfer and Skilled Workforce — Despite collaboration with global equipment manufacturers (e.g., ASML), challenges in transferring complex technology and building a specialized workforce could impact production timelines.
  • Probability: Medium
  • Impact: High
• Fluctuations in Global Demand and Competition — By 2026, the global semiconductor cycle may be in a different phase. In a downturn or oversupply scenario, new Indian fabs could face pressure on cost competitiveness and their ability to gain market share.
  • Probability: High
  • Impact: Medium

Outlook

Key events and indicators to monitor next week:

• More detailed updates on the construction and equipment installation of semiconductor plants (especially Dholera).
• Advance discussions on the Central Budget 2026-27, particularly regarding tax incentives and capital expenditure allocations for semiconductors, AI, and electronics manufacturing.
• Potential announcement of the launch of the first among the four announced indigenous AI models.

Positioning consideration: Maintain an overweight stance in the portfolio while increasing exposure across the semiconductor value chain (fab, design, testing, packaging, equipment, and chemicals), as this week signals a structural turning point for the country's technology industry.