CG Power and Industrial Solutions Ltd, part of the Chennai based Murugappa Group, has roped in partners to jointly build an outsourced semiconductor assembly and test facility in India.

CG Power, Renesas Electronics Corporation, a supplier of advanced semiconductor solutions and Stars Microelectronics (Thailand) Public Co. Ltd, a Thailand-based outsourced semiconductor assembly and test (OSAT) provider have recently signed an agreement to establish a joint venture (JV) to build and operate an OSAT facility in India, CG Power said.

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the project of the JV under India’s semiconductor scheme on February 29, 2024, it added.

The JV will be 92.3 per cent owned by CG, with Renesas and Stars Microelectronics each holding equity capital of approximately 6.8 per cent and 0.9 per cent, respectively. The JV plans to invest ₹7,600 crore over a five-year period, which will be financed through a mix of subsidies, equity, and potential bank borrowings as required.

“CG’s entry into semiconductor manufacturing marks a strategic diversification for us. Our partners Renesas and Stars Microelectronics will make our learning curves steeper and help us focus on innovation and excellence,” S Vellayan, Chairman, CG Power and Industrial Solutions Ltd, said.

Also read: South Korean Simmtech to set up ₹1,250 crore unit for semiconductor ecosystem

The JV will set up a state-of-the-art manufacturing facility in Sanand, Gujarat, with a capacity that will ramp up to 15 million units per day. The JV will manufacture a wide range of products—ranging from legacy packages such as QFN (quad flat no-lead) and QFP (quad flat package) to advanced packages such as FC BGA, and FC CSP. The JV will cater to industries such as automotive, consumer, industrial, 5G, to name a few.

The JV bring will together unique capabilities of the partners—CG, with around 86 years of manufacturing expertise, is keen to build semiconductor capabilities and an ecosystem in India. Renesas will provide advanced semiconductor technology and expertise. Stars Microelectronics will provide both technology for legacy packages and training and enablement

“India is a critical part of Renesas’ business. By partnering with the Murugappa Group and Stars Microelectronics, we will bolster India’s semiconductor ecosystem and address the growing semiconductor demand for the customers worldwide,” Hidetoshi Shibata, CEO of Renesas, said.

Also read: Murugappa Group’s EV arm plans another round of fund raise and higher capex in FY25

Prompong Chaikul, Chairman of the Executive Committee of Stars Microelectronics (Thailand) Public Co Ltd, said: “Leveraging our expertise and experience in OSAT, we are committed to providing robust support to ensure the success of this project in India.”

CG Power has become a subsidiary of Tube Investments of India Ltd after Murugappa Group acquired a controlling stake in the cash-strapped CG Power three years ago. CG Power is engaged in the design, manufacturing, and marketing of products related to power generation, transmission, and distribution. It has units located in Maharashtra, Goa, and Madhya Pradesh.

The company’s share price closed 4.46 per cent to close at ₹463 on the BSE on Friday.

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