CG Power and Industrial Solutions share price jumped over 11% on Friday after the company signed a joint venture to build and operate an outsourced semiconductor assembly and test facility. CG Power shares rallied as much as 11.38% to ₹494.40 apiece on the BSE.
CG Power has signed an agreement with Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions and Stars Microelectronics, a Thailand-based OSAT provider to build and operate an OSAT facility in India.
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the project of the JV under India’s Semiconductor scheme on February 29.
CG Power is keen to build semiconductor capabilities and ecosystem in India. 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 JV will be 92.3% owned by CG, with Renesas and Stars Microelectronics each holding equity capital of approximately 6.8% and 0.9%, respectively. The JV plans to invest ₹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 added.
“CG’s entry into semiconductor manufacturing marks a strategic diversification for us,” said S Velleyan, managing director of the company.
The JV will set up a manufacturing facility in Sanand, Gujarat, with a capacity that will ramp up to 15 million units per day. It will manufacture a wide range of products – ranging from legacy packages such as QFN and QFP to advanced packages such as FC BGA, and FC CSP.
The venture will cater to industries such as automotive, consumer, industrial and 5G.
At 10:25 am, CG Power shares were trading 6.91% higher at ₹474.50 apiece on the BSE.
