CG Power Announces Joint Venture in Semiconductor Manufacturing with Two Foreign Firms

CG Power and Industrial, a subsidiary of the Murugappa Group, revealed its collaboration with Renesas Electronics America and Stars Microelectronics (Thailand) to establish an outsourced semiconductor assembly and testing (OSAT) facility in India. The announcement was made on Thursday, signifying a significant stride in India's semiconductor ecosystem.

As part of the joint venture (JV), CG Power and Industrial has inked agreements on Technology and Services, and offtake and manufacturing with Renesas Electronics Corporation, Japan, according to the filing. Additionally, a technology know-how sharing and technical support agreement has been signed with Stars.

Under the terms of the agreement, CG, Renesas, and Stars will invest $205 million, $15 million, and $2 million, respectively. The JV company will hold an equity stake of approximately 92.34%, 6.76%, and 0.90% of CG, Renesas, and Stars, respectively.

The closure of the JV investments is contingent upon the satisfactory completion of conditions outlined in the agreement and obtaining necessary approvals from relevant government agencies. "The closing of the Proposed Project Transaction is also subject to satisfactory completion of the conditions precedents as contained in the Joint Venture Agreement," stated the company.

Union Minister of State Rajeev Chandrasekhar extended congratulations on the new Joint Venture, highlighting its role in bolstering the Indian Semiconductor Ecosystem.

However, the announcement of the joint venture is subject to regulatory and statutory approvals, including clearance from the Ministry of Electronics and Information Technology (MeitY), Government of India, and subsidies from central and state governments, as mentioned in the filing with the Bombay Stock Exchange (BSE).

In November of the previous year, the company had disclosed its application to the government to establish an OSAT unit with an investment of approximately $791 million spread over five years, expressing interest in partnering with global entities.

Established in 1937, the Murugappa Group entity operates manufacturing facilities in nine countries across Asia, Europe, and North America, boasting a diverse product portfolio spanning electrical, industrial, and consumer segments.

BS