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CG Power, Renesas, And Stars Microelectronics To Establish Chip Plant In India

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The Murugappa Group, a new player in the Indian electric vehicle (EV) market and based in Chennai, stands to gain from the internal provision of semiconductors through its subsidiary, CG Power.

The Murugappa Group, based in Tamil Nadu and owning CG Power and Industrial Solutions, has recently forged a joint venture agreement with Renesas Electronics America and Stars Microelectronics (Thailand) Public Co. This partnership aims to establish an Outsourced Semiconductor Assembly and Testing (OSAT) facility within India, though the exact location or state for this semiconductor assembly plant has yet to be disclosed.

According to a regulatory filing made on February 8, the joint venture will see investments of up to US$ 205 million by CG Power, $15 million by Renesas Electronics America, and $2 million by Stars Microelectronics. These contributions represent equity stakes of approximately 92.34%, 6.76%, and 0.90% in the venture, respectively.

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The project, with an anticipated total investment of US$791 million over five years, is expected to be financed through a mix of subsidies, equity contributions, and debt financing as necessary.

Furthermore, CG Power has entered into a comprehensive agreement with Renesas Electronics Corporation, Japan, for technology and services, manufacturing and off-take agreements, and with Stars Microelectronics (Thailand) for the sharing of technological know-how and technical support.

The Murugappa Group, which has diversified interests across multiple sectors, has made strides in India’s rapidly expanding electric vehicle (EV) market. This includes the launch of three-wheeler EVs (Montra Super Auto) by its EV division, Montra Electric, and the electric Rhino heavy-duty truck by IPLTech Electric, another subsidiary under TI Electric Mobility. Given that electric vehicles require a significant number of semiconductors, potentially more than internal combustion engine vehicles, Montra Electric is poised to significantly benefit from the semiconductor production capabilities of CG Power in the future.

In December 2021, the Indian government initiated the Semicon India Programme with a budget of Rs 76,000 crore to nurture the semiconductor and display manufacturing ecosystem in the country. Additionally, on May 31, 2023, the government introduced the Modified Semicon India Programme, offering a fiscal incentive covering 50% of the project costs for the establishment of semiconductor fabrication plants (fabs) in India by companies, consortia, and joint ventures.

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Aryaman Raghuvanshi
Aryaman Raghuvanshi
Aryaman Raghuvanshi is a Journalist at EFY. His passion is to explore the future of mobility, which gets him to cover latest technologies shaping the future of automobiles and EVs. But, at times he writes on broader technologies too. LinkedIn: https://www.linkedin.com/in/aryaman-raghuvanshi-2431b7153

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