Murugappa's CG Power Collaborates to Establish ₹7,600-Crore Chip Unit in Gujarat

CG Power and Industrial Solutions Ltd, a subsidiary of the Murugappa Group based in Chennai, has entered into partnerships to jointly establish an outsourced semiconductor assembly and test facility in India.

In a recent development, CG Power, Renesas Electronics Corporation, a leading supplier of advanced semiconductor solutions, and Stars Microelectronics (Thailand) Public Co. Ltd, a Thailand-based outsourced semiconductor assembly and test (OSAT) provider, have inked an agreement to form a joint venture (JV) aimed at building and operating an OSAT facility in India, as confirmed by CG Power.

The Union Cabinet, chaired by Prime Minister Narendra Modi, gave its approval to the JV project under India’s semiconductor scheme on February 29, 2024.

The ownership structure of the JV will see CG holding 92.3%, with Renesas and Stars Microelectronics each having equity stakes of approximately 6.8% and 0.9%, respectively. The JV plans to invest ₹7,600 crore over a five-year period, with funding coming from a combination of subsidies, equity, and potential bank borrowings.

S Vellayan, Chairman of CG Power and Industrial Solutions Ltd, expressed that CG's foray into semiconductor manufacturing signifies a strategic diversification. He highlighted the valuable contributions of partners Renesas and Stars Microelectronics in facilitating innovation and excellence.

The JV aims to establish a cutting-edge manufacturing facility in Sanand, Gujarat, with a capacity scaling up to 15 million units per day. The facility will produce a wide range of products catering to various industries, including automotive, consumer electronics, industrial applications, and 5G technology.

The partnership leverages the unique strengths of each entity: CG brings its 86 years of manufacturing expertise and a commitment to building a semiconductor ecosystem in India, while Renesas provides advanced semiconductor technology and expertise. Stars Microelectronics contributes technology for legacy packages as well as training and enablement.

Hidetoshi Shibata, CEO of Renesas, emphasized the significance of India in Renesas' global business strategy and the role of the partnership in bolstering India's semiconductor ecosystem to meet the growing global demand.

Prompong Chaikul, Chairman of the Executive Committee of Stars Microelectronics (Thailand) Public Co Ltd, reiterated the commitment to providing robust support for the success of the project in India, leveraging the company's expertise and experience in OSAT.

CG Power, which became a subsidiary of Tube Investments of India Ltd after the Murugappa Group acquired a controlling stake three years ago, is engaged in the design, manufacturing, and marketing of products related to power generation, transmission, and distribution. The company operates units in Maharashtra, Goa, and Madhya Pradesh.

HBL