CG Power & Industrial Solutions, a company majority-owned by Murugappa Group's Tube Investments, has unveiled a bold $791 million proposal to establish a semiconductor OSAT (Outsourced Semiconductor Assembly and Test) facility in India. The announcement, which came earlier today, has seen the company's share price surge to Rs. 469.
The firm, which reported a strong FY23 revenue of Rs 6,973 crore, is currently awaiting approval from the Ministry of Electronics and Information Technology (MeiTY) to commence the ambitious project. The proposed OSAT facility is expected to span over five years and aims to capitalize on India's rapidly growing semiconductor market, which is projected to reach $63 billion by the mid-decade.
To finance this venture, CG Power is considering a mix of subsidies from the Indian government and forming joint venture partnerships with technology providers. They are also exploring various equity options and debt financing avenues. Active discussions are underway to establish a technical JV partnership that would support this strategic move.
This initiative marks a significant diversification for CG Power, which has been traditionally focused on designing and manufacturing within the power sector. Since its acquisition by Tube Investments for Rs 700 crore in November two years ago, CG Power has operated across multiple locations in India as part of the larger conglomerate.
The company's decision to enter the semiconductor space aligns with the global market trend, where the OSAT industry is expected to grow annually by over eight percent until the late '20s. With this development, CG Power aims to position itself strategically within the burgeoning industry and contribute to India's technological advancement in semiconductors.
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