India’s semiconductor ambition got a major boost as CG Power and Industrial Solutions Ltd, a Murugappa Group company, announced plans to set up a ₹7,600 crore Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. The project, approved by the Union Cabinet on February 29, 2024, marks a historic step in the country’s push to reduce dependence on global chipmakers and strengthen its electronics manufacturing ecosystem.
The Project at a Glance
- Total Investment: ₹7,600 crore spread over five years
- Location: Sanand Industrial Hub, Gujarat
- Facility Type: OSAT (Outsourced Semiconductor Assembly and Test)
- Production Capacity: Up to 15 million units per day
- Approval: Part of India’s Semicon India Program with government subsidies
This facility will not manufacture wafers but will focus on the assembly, packaging, and testing of semiconductor chips — a critical link in the supply chain.
Joint Venture Structure
The OSAT unit will be established under a joint venture between:
- CG Power & Industrial Solutions – 92.3% stake
- Renesas Electronics Corporation (Japan) – ~6.8% stake
- Stars Microelectronics (Thailand) – ~0.9% stake
This unique partnership brings together CG Power’s manufacturing strength, Renesas’ technological expertise, and Stars Microelectronics’ packaging capabilities.
Technology & Product Focus
The Sanand facility will produce a wide range of semiconductor packaging solutions including:
- Legacy packages: Quad Flat No-lead (QFN), Quad Flat Package (QFP)
- Advanced packages: Flip-Chip Ball Grid Array (FC-BGA), Flip-Chip Chip Scale Package (FC-CSP)
Target Industries
- Consumer electronics
- Automotive (EVs, safety systems, infotainment)
- Industrial automation
- Power management solutions
- 5G communication and IoT devices
With India’s rising demand for EVs, telecom equipment, and consumer gadgets, the facility aims to serve both domestic and export markets.
Financing and Government Backing
The ₹7,600 crore investment will be funded through:
- Government incentives under the semiconductor subsidy scheme
- Equity contributions from JV partners
- Bank borrowings, if required
The Cabinet’s approval signals strong central support to boost ‘Make in India’ semiconductor capacity, reducing the nation’s import reliance.
Market Impact & Investor Sentiment
The announcement triggered a strong reaction on Dalal Street:
- CG Power’s shares surged 11–12% immediately after government approval.
- On the BSE, shares touched ₹494.40 intraday, up 11.38%, before settling around ₹474.50 (up 6.91%).
- Analysts view the project as a long-term value creator as India pushes to become a semiconductor hub.
Leadership Comments
S. Vellayan, Chairman of CG Power, emphasized the move as a strategic diversification for the company:
“With Renesas and Stars as partners, we bring in global expertise that will help us climb the semiconductor learning curve faster. This project will not only diversify our business but also contribute to India’s self-reliance in chips.”
Why This Matters for India
- Bridges a critical gap: India has wafer fabs under discussion but lacked world-class OSAT facilities.
- Boosts electronics manufacturing: Strengthens the supply chain for mobile phones, EVs, 5G equipment.
- Reduces import dependence: Currently, India imports nearly all advanced semiconductor products.
- Job creation & skill development: The facility is expected to generate thousands of direct and indirect jobs.
Final Takeaway
The CG Power semiconductor facility in Sanand is more than just a corporate expansion — it’s a symbol of India’s semiconductor journey. With ₹7,600 crore of committed investment, cutting-edge packaging technologies, and strong government backing, the project is poised to play a transformative role in India’s electronics ecosystem.
If successful, it could mark India’s emergence as a credible global player in the semiconductor value chain.