- JPMorgan flagged a potential $1 billion OSAT investment by Kaynes under ISM 2.0 program
- India's semiconductor industry is shifting focus from capacity creation to export and demand
- Kaynes, CG Power, Micron, CDIL, and Suchi Semicon are exporting chips and serving domestic markets
JPMorgan has flagged a potential $1 billion outsourced semiconductor assembly and testing (OSAT) investment by Kaynes Technology under India's ISM 2.0 programme, making the proposed project the key takeaway from the brokerage's review of the SEMICON India event last week.
The proposed investment would be around three times Kaynes' commitment under ISM 1.0, JPMorgan said, adding that investors should watch for a potential announcement from the company regarding its application for the OSAT project.
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The brokerage's bigger takeaway is that India's semiconductor industry is moving beyond capacity creation, with existing facilities seeing both domestic demand and export opportunities.
JPMorgan also noted that Kaynes, CG Power, Micron, CDIL and Suchi Semicon are already exporting chips while also supplying the domestic market. According to the brokerage, chips produced at these facilities are proving competitive on both cost and quality as compared to global peers.
More importantly, customer demand is beginning to translate into capacity bookings. JPMorgan said production at the five OSAT/ATM facilities is getting booked by clients, shifting the industry's focus towards ramping up production.
For Kaynes, the potential ISM 2.0 project comes as its first semiconductor facility under ISM 1.0 moves into commercial production. Kaynes Semicon has also been reported to be planning a $1 billion Gujarat project focused on advanced packaging and LED/micro-LED technologies.
JPMorgan also highlighted the company's existing semiconductor revenue trajectory. Kaynes is guiding for Rs 2.5–3 billion in OSAT revenue in FY27, with around Rs 1 billion already booked, according to the brokerage report.
The government has said ISM 2.0 is progressing faster than the original six-year timeline, with its objectives potentially being achieved earlier. JPMorgan also highlighted that ISM 1.0 reached its objectives in four years versus the original six-year target.
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