SUMMARY
- For setting up an OSAT, CG Power has entered into a JV with Renesas, Stars Microelectronics
- The JV covers access to technology through Stars Microelectronics and offtake of the output by Renesas Electronics
- CG Power will be investing up to $205 million representing approximately 92.34% ownership in the JV company.
In a significant stride toward realizing India’s vision of becoming a semiconductor powerhouse, CG Power and Industrial Solutions Ltd has forged a strategic joint venture with Renesas Electronics America Inc. and Stars Microelectronics (Thailand) Public Co. Ltd. This collaboration aims to establish an Outsourced Semiconductor Assembly and Test (OSAT) facility. In November 2023, CG Power had filed an application with Ministry of Electronics and Information Technology (MeitY) seeking approval to set up an OSAT facility to seek the grant of subsidy
Although the JV is subject to necessary regulatory and statutory approvals, CG Power will be investing up to $205 million (representing approximately 92.34% ownership in the JV company. Renesas will invest up to $15 million with 6.76% share and Stars Microelectronics will invest $2million with 0.90% share.
Rajeev Chandrasekhar, Minister of State, Ministry of Electronics and IT has welcomed the JV stating “Congratulations on this newest JV that will invest in the fast expanding Indian Semiconductor Ecosystem – Welcome.”
Satya Gupta, president, VLSI Society told Business Today, “It’s a very positive development that CG Power has signed up for a JV with Renesas Electronics and Stars Microelectronics. This relationship covers both access to technology through Stars Microelectronics and offtake of the output by Renesas Electronics, which are 2 most important ingredients for commercial success of an OSAT project.”
When CG Power had filed the application with Meity in November, it had estimated investment on the project over a period of five years at $ 791 million, which was expected to be funded by a combination of subsidy, JV Partners equity contribution and debt, as required.
OSAT units also play a crucial role in semiconductor manufacturing as they package and test the silicon chips made at the foundries before they are shipped to the market. However, even for setting up an OSAT, the Indian companies would have to obtain production-grade technology, which can be obtained from various sources, such as joint ventures, technology transfers, or licensing agreements.
Since the government announced the semiconductor scheme with the incentive outlay worth Rs 76,000 crores in December 2021, the only big project which has received approval from Meity is US-chip maker Micron’s ATMP project worth $2.75 billion. In the recent interim budget, the government had allocated Rs 6,903 crores for the semiconductor scheme.
