Udaipur Kiran

Semiconductor Stocks: How Lower Tariffs Could Transform India’s Semiconductor Industry

New Delhi, India – February 14, 2025

As India advances its “Make in India” initiative, the semiconductor industry has emerged as a strategic priority for the government. However, industry leaders and global stakeholders are emphasizing the need for lower tariffs and a more favorable trade policy to accelerate India’s integration into the global semiconductor supply chain.

Semiconductor Stocks
Semiconductor Stocks

Recently, John Neuffer, President and CEO of the US Semiconductor Industry Association (SIA), underscored the importance of zero tariffs on semiconductor manufacturing for India to become a major player in the global chip industry. In a recent statement, Neuffer pointed out that several leading semiconductor supply chain partners worldwide already benefit from zero tariff treatment, while India still imposes trade barriers that could hinder its competitive advantage.

Why Tariff Reduction is Critical for India’s Semiconductor Ambitions

1. Strengthening India’s Position in the Global Semiconductor Supply Chain

The semiconductor industry is highly globalized, with supply chains spanning multiple countries, from chip design in the US to fabrication in Taiwan and assembly in Southeast Asia. For India to establish itself as a viable semiconductor hub, it must:

Lower tariffs would reduce operational costs for domestic manufacturers, making India more attractive for foreign direct investment (FDI) in the semiconductor sector.

2. Boosting Domestic Semiconductor Manufacturing & Assembly

While India has made strides in chip design and software, it still lacks large-scale semiconductor fabrication (fabs) and assembly plants. Lowering tariffs would:

3. Enhancing India’s Competitiveness Against Global Semiconductor Hubs

Countries like Taiwan, South Korea, and China have dominated semiconductor manufacturing due to:

For India to compete with these established hubs, it must eliminate trade barriers and provide cost-effective production environments for chipmakers.

4. Encouraging Investment in Semiconductor Skill Development

Beyond reducing tariffs, investment in skill development is crucial. Neuffer highlighted that India needs to go beyond chip design and focus on building expertise in manufacturing, assembly, and testing.

This would involve:

By strengthening the workforce, India can create a long-term pipeline of skilled professionals for the semiconductor industry.

The Potential Impact on Semiconductor Stocks in India

The implementation of lower tariffs and supportive policies could significantly boost semiconductor-related stocks in India. Some key beneficiaries would include:

1. Tata Electronics and Vedanta-Foxconn JV

2. Dixon Technologies and Syrma SGS Technology

3. Semiconductor Design Firms like HCL Tech and Wipro

4. Reliance and Adani in Electronics Manufacturing

Challenges and Considerations in Implementing Zero Tariffs

Despite the potential benefits, there are challenges in implementing a zero-tariff policy:

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