FabInIndia: All About Murugappa Group's Foray Into Semiconductors Via CG Power's ₹7600 Crore OSAT Plant In Gujarat

A joint proposal by India's CG Power and Industrial Solutions Ltd. (CG Power), Japanese chipmaker Renesas Electronics Corporation and Thailand's Stars Microelectronics to build an outsourced semiconductor assembly and test (OSAT) facility has been selected by the Union Ministry of Electronics and Information Technology (MeiTY) for incentives under the India Semiconductor Mission(ISM) program.

The JV will set up the OSAT manufacturing facility in Sanand, Gujarat, with a capacity that will ramp up to 15 million daily units. US-based chipmaker Micron Technology, the first company to win incentives under the ISM program, also chose Sanand for its ₹30,000 crore assembly, testing and packaging (ATMP) plant. 

The CG Power-led JV will be investing ₹7,600 crore over five years. Construction of the plant is scheduled to begin within the next 100 days. While CG Power would hold a 92.3% stake in the JV, Renesas and Stars Microelectronics will pick up 6.8% and 0.9% stakes, respectively.

The JV will receive capex subsidies of up to 50 per cent from the Union Government for setting up the OSAT unit. It may also receive additional subsidy support from the Gujarat Government.

A critical part of the semiconductor value chain, OSAT provides assembly, packaging, and testing services to chip manufacturers.

The JV proposes manufacturing a wide range of products - from legacy packages such as QFN and QFP to advanced packages such as FC BGA and FC CSP. The JV will also cater to automotive, consumer, industrial, and 5G, among other verticals.

In November 2023, CG Power, in a regulatory filing, disclosed that it had applied to the MeiTY for approval to set up an OSAT facility in India.

CG Power designs manufactures, and markets power generation, transmission, and distribution products with 13 manufacturing facilities nationwide, including Maharashtra, Goa, and Madhya Pradesh.

In 2020, Chennai-based industrial conglomerate Murugappa Group's engineering firm Tube Investments of India picked up a controlling stake in CG Power for a consideration of ₹700 crore. Owned by Gautam Thapar group, CG Power was facing a severe crisis after a financial fraud worth thousands of crores was detected.

About JV Partners

Renesas will provide advanced semiconductor technology and expertise for the proposed OSAT unit.

Renesa was founded in 2010 through the merger of Mitsubishi Electric, a joint chip venture operated by Hitachi and a chip subsidiary of NEC.

Renesas designs, develops and manufactures a wide variety of products. It is a manufacturer of microcontrollers and automotive electronic components. It also develops mobile semiconductors, application processors, LCD drivers, RF and mixed-signal ICs, and system-on-chips.

Stars Microelectronics will provide both technology for legacy packages and training and enablement. The Thai company is an electronic solution provider for OSAT and electronics manufacturing services (EMS). It operates through two segments: Microelectronics Module Assembly and Integrated Circuit Packaging.