MUMBAI, India – In a significant move to expand India's semiconductor manufacturing capabilities, CG Power and Industrial Solutions Limited, Renesas Electronics Corporation, and Stars Microelectronics have formed a joint venture to establish a new Outsourced Semiconductor Assembly and Test (OSAT) facility in the country.
The joint venture, predominantly owned by CG Power with a 92.3% stake, brings together the manufacturing expertise of CG Power, advanced semiconductor technology from Renesas, and OSAT proficiency from Stars Microelectronics. Renesas and Stars Microelectronics will hold 6.8% and 0.9% equity capital, respectively, in the joint venture.
With an investment of INR 7,600 crores planned over the next five years, the venture aims to set up a state-of-the-art manufacturing facility in Sanand, Gujarat. The facility will have the capacity to produce up to 15 million units per day, manufacturing a variety of products from legacy packages like QFN and QFP to advanced packages such as FC BGA and FC CSP.
This production will support industries including automotive, consumer electronics, industrial applications, and 5G technologies.
CG Power's Chairman, Mr. S. Vellayan, emphasized the strategic importance of the joint venture, noting that it marks a diversification for the company and a significant development for India's semiconductor manufacturing sector. Renesas CEO, Mr. Hidetoshi Shibata, highlighted India's growing importance in the global semiconductor landscape and expressed commitment to investing in the country's potential.
Mr. Prompong Chaikul, Chairman of the Executive Committee of Stars Microelectronics, expressed honor in contributing to the venture, underscoring the company's commitment to the project's success.
The joint venture is expected to contribute to the "Make in India for the World" vision by leveraging the combined strengths of the partners. It also represents a strategic step for CG Power, a company with a rich history in the electrical engineering industry, as it enters the semiconductor manufacturing space.
The information for this article is based on a press release statement.
InvestingPro Insights
As CG Power and Industrial Solutions Limited (CG Power) ventures into the semiconductor space with its new joint venture, financial metrics and expert analysis from InvestingPro offer insights into the company's current market position. CG Power holds a commanding 92.3% stake in the partnership, indicating a significant commitment to this strategic diversification.
InvestingPro data shows that CG Power is trading at a low Price-to-Earnings (P/E) ratio relative to near-term earnings growth, which could suggest that the stock is undervalued given its growth prospects. This is particularly relevant as the company embarks on this new semiconductor project with potential for substantial future earnings. Additionally, CG Power is a prominent player in the Electrical Equipment industry, which may provide a competitive advantage in the semiconductor sector due to synergies between the two industries.
According to InvestingPro Tips, CG Power holds more cash than debt on its balance sheet, an indicator of financial stability which could be crucial in supporting the capital-intensive semiconductor venture. Moreover, analysts predict that the company will be profitable this year, providing further confidence to investors about its financial health amidst this expansion.
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