Industry leaders at Semicon India 2026 emphasized moving beyond electronics assembly toward design and component manufacturing. The goal is to increase domestic value addition to 40-50%. Investors are watching how electronic manufacturing services companies will manage the high investment and technical complexity required for this transition.
At the Semicon India 2026 event, leaders from major electronics and manufacturing companies highlighted a critical need for the Indian sector to evolve. While India has successfully ramped up large-scale electronics assembly, executives argued that true global competitiveness now depends on shifting toward product design, component manufacturing, and owning intellectual property rather than just assembling parts.
Moving Up the Value Chain
Currently, many Indian manufacturers operate as assembly partners, often depending heavily on imported electronic parts. This model leaves companies vulnerable to supply chain issues and global price swings. Experts at the event noted that moving toward domestic production of components, such as capacitors and resistors, is essential to reach the goal of 40-50% domestic value addition.
For listed companies in the Electronic Manufacturing Services (EMS) space, this shift represents a strategic change. Instead of just fitting together imported components, companies are being encouraged to participate earlier in the design phase. This transition is expected to improve profit margins, but it requires significant money spent on expansion, research, and development.
Technology and Execution Challenges
Transitioning to advanced manufacturing is not without risks. Industry representatives pointed out that success will depend on more than just government incentives. It will require strong investments in factory automation, such as digital twins and software-defined processes, to improve manufacturing flexibility and meet global quality benchmarks.
Another major challenge highlighted was the talent gap. Industry leaders stressed that engineering education and vocational training must align more closely with the needs of advanced manufacturing. Furthermore, building capabilities in material processing—including handling rare earths and critical minerals—is necessary to support the long-term semiconductor goals. Companies that can bridge these gaps may secure a stronger competitive advantage, while those struggling with high capital costs or slow adoption of new technologies may face pressure on their financial flexibility.
What Investors Should Track
Investors monitoring this sector should look for specific indicators in company disclosures and quarterly reports. Key areas to watch include the percentage of domestic sourcing in product costs, which signals progress in supply chain independence. Additionally, details on investments in research and development and new technology partnerships can indicate how quickly a company is moving toward design-led manufacturing.
The sector's move toward higher-value products is a long-term goal. Whether companies can execute these plans without excessive debt or margin pressure will be a critical monitorable in the coming years. As the industry tries to compete with established global players, the ability to balance heavy capital spending with consistent output quality will likely define the success of this shift.