CG Power to set up chip plant in India with Renesas and Stars Microelectronics
Chennai-based Murugappa Group, which is a recent entrant into the Indian EV market, will benefit from inhouse supplies of semiconductors from its subsidiary company CG Power.
The Tamil Nadu-based Murugappa Group-owned CG Power and Industrial Solutions has entered into a joint venture pact with Renesas Electronics America and Stars Microelectronics (Thailand) Public Co to set up an Outsourced Semiconductor Assembly and Testing (OSAT) facility in India. The specific site or the choice of state for the semiconductor assembly plant has not been announced.
As per a regulatory filing on February 8, CG Power, Renesas Electronics America and Stars Microelectronics plan to invest, in one or more tranches, up to US$ 205 million, $15 million and $2 million respectively, towards equity capital of the joint venture company representing approximately 92.34%, 6.76%, and 0.90% respectively.
The estimated investment on the project for a period of five years is US$791 million, which is expected to be funded by a combination of subsidy, equity contribution and debt as required.
CG Power has also signed an agreement for technology and services and offtake and manufacturing with Renesas Electronics Corporation, Japan, and another for technology know-how sharing and technical support with Stars Microelectronics (Thailand).
As is known, the well-diversified, multi-company Murugappa Group is a recent entrant into India's booming electric vehicle segment through three-wheelers (Montra Super Auto) through its EV division, Montra Electric. There is also the electric Rhino heavy-duty truck manufactured by IPLTech Electric, another Murugappa Group subsidiary and a venture under TI Electric Mobility.
Typically, EVs need as many if not more semiconductors than ICE vehicles and with its own company CG Power manufacturing chips a few years down the line, Montra Electric would substantially benefit from inhouse supplies.
In December 2021, the government of India launched the Semicon India Programme with an outlay of Rs 76,000 crore for the development of the semiconductor and display manufacturing ecosystem in the country. On May 31, 2023, the government announced the Modified Semicon India Programme under which a fiscal incentive of 50% of the project cost is available to companies, consortia and joint ventures for setting up of semiconductor fabs (plants) in India.
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