Murugappa Group Set to Invest $791 Million in Semiconductor Industry Expansion

Chennai-based Murugappa Group has unveiled plans to enter the semiconductor assembly and testing business, announcing a substantial investment of $791 million over the next five years. The group's venture into semiconductors will be facilitated through CG Power and Industrial Solutions, a company acquired by the Murugappas in November 2020.

Following the announcement, the share price of CG Power experienced a notable surge, climbing approximately 20 percent to ₹469. The ₹7,000-crore company has submitted an application to the Union Ministry of Electronics and Information Technology (MeiTY) seeking subsidies for an 'outsourced semiconductor assembly and testing' (OSAT) facility in India.

The funding for this ambitious project will be sourced through a combination of subsidies, joint venture partnerships, equity contributions, and debt. Ongoing discussions are underway for a potential joint venture with technology providers.

Semiconductors, the fundamental components of electronic devices spanning from smartphones to cloud servers and various industrial applications, are categorized into three segments: design, fabrication, and assembly-and-testing. Fabrication is recognized as the most capital, technology, water, and power-intensive segment.

The Indian semiconductor market, estimated at $15 billion in 2020, is projected to grow substantially, reaching $63 billion by 2026. The global Outsourced Semiconductor Assembly and Test Services (OSAT) market is also witnessing robust growth, with a projected market size of $76.23 billion by 2028. This sector is anticipated to grow at a Compound Annual Growth Rate (CAGR) of 8.07 percent during the forecast period (2023–2028), playing a pivotal role in the rapidly expanding semiconductor industry, as per industry reports.

HBL