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Business News/ Industry / Manufacturing/  All you need to know about CG Power's 7,600 crore chip facility approved by govt
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All you need to know about CG Power's ₹7,600 crore chip facility approved by govt

The Union Cabinet on February 29 approved the establishment of three semiconductor plants with a combined investment of ₹1.26 lakh crore. To encourage domestic manufacturing of semiconductors, the government is also offering incentives amounting to ₹76,000 crore.

File Photo: Semiconductor chips are seen on a printed circuit board in this illustration (Reuters / Florence Lo)Premium
File Photo: Semiconductor chips are seen on a printed circuit board in this illustration (Reuters / Florence Lo)

CG Power said it has partnered with Japan's Renesas Electronics and Thailand's Stars Microelectronics for a 7,600 crore (or $222 million) semiconductor facility in Sanand, Gujarat, as part of India's chip push.

The Union Cabinet on February 29 approved the establishment of three semiconductor plants with a combined investment of 1.26 lakh crore. To encourage domestic manufacturing of semiconductors, the government is also offering incentives amounting to 76,000 crore.

The construction of these semiconductor plants is set to commence within the next 100 days, Minister for Electronics and IT, Ashwini Vaishnaw said during a press briefing after the cabinet meeting.

While the first two approvals were for different units of the Tata Group, the third was for Murugappa Group-owned CG Power.

All You Need to Know About CG Power's New Planned Chip Plant

CG Power and Industrial Solutions will form a joint venture (JV) with an arm of chip specialist Renesas Electronics Corp, and Stars Microelectronics for a 7,600 crore facility in Sanand, Gujarat.

The JV plans to invest the 7,600 crore over a five-year period, which will be financed through a mix of subsidies, equity, and potential bank borrowings as required, it said in a statement.

Renesas, a leading semiconductor company headquartered in Japan, will provide advanced semiconductor technology and expertise. Stars Microelectronics will provide both technology for legacy packages and training and enablement, CG Power said in a release.

The proposed plant in Sanand is anticipated to have a daily capacity of 15 million chips. The focus of CG Power's semiconductor unit will be on manufacturing chips catering to consumer, industrial, automotive, and power applications.

The JV aims to create an outsourced semiconductor assembly and testing (OSAT) facility, responsible for packaging, assembling, and testing foundry-made silicon wafers to produce finished semiconductor chips.

Renesas Electronics America and Stars Microelectronics will hold stakes of 6.76 percent and 0.9 percent, respectively. Meanwhile, CG Power will be the majority stakeholder, possessing 92.34 percent of the joint venture, as per a Reuters report.

CG Power shares rallied as much as 11.38 percent to 494.40 apiece on the BSE on March 1. At 10:25 am, CG Power shares were trading 6.91 percent higher at 474.50 apiece on the BSE.

In January, CG Power announced a standalone profit after tax of 216.47 crore for the October-December quarter. Its standalone total income for the quarter increased to 1,914.86 crore, up from 1,680.30 crore in the same period last fiscal year.

In the same quarter, the company said it had applied to the Ministry of Electronics and Information Technology for approval to establish an outsourced semiconductor assembly and test facility.

What Other Proposals Were Approved?

Tata Electronics will establish a semiconductor fab with Taiwan's Powerchip Semiconductor Manufacturing Corp at the special industrial region in Dholera, Gujarat. The facility aims to manufacture 50,000 wafers monthly, requiring an investment of 91,000 crore.

Tatas have also received government approval for their Tata Semiconductor Assembly and Test (TSAT) proposal to construct a new semiconductor assembly and test facility in Jagiroad, Assam. The government has given the green light to this project, which involves an investment of 27,000 crore.

The facility, with a daily capacity of 48 million chips, is anticipated to create more than 27,000 jobs, both directly and indirectly, in the region. And marks a significant milestone as it will establish India's inaugural semiconductor unit in the Northeast.

The three investment proposals, totalling over 1.26 lakh crore, combined with the previously sanctioned Micron unit, will use around 59,000 crore from the 76,000 crore incentives. Vaishnaw anticipates more semiconductor proposals soon.

Last June, the Cabinet greenlit Micron's proposal to establish a semiconductor unit in Sanand, Gujarat. Currently heavily reliant on semiconductor imports, the Indian government aims to boost domestic manufacturing.

The global semiconductor industry is projected to reach $1 trillion by 2030, with Indian semiconductor demand expected to surpass $110 billion.

(With inputs from PTI, Reuters and Bloomberg)

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Published: 01 Mar 2024, 11:23 AM IST
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