Indian semiconductor plant to be established by CG Power-led venture. In an exchange filing on Friday, CG Power and Industrial Solutions announced that it has formed a joint venture (JV) with Thailand-based Stars Microelectronics and Renesas Electronics America to establish a semiconductor assembly and testing plant in India.
The exchange filing stated that CG Power, Renesas, and Stars will contribute equity capital to the JV in one or more tranches of up to $205 million, $15 million, and $2 million, respectively. This will represent approximately 92.34 percent, 6.76 percent, and 0.9 percent, respectively.
The company would need to submit an application to establish an Outsourced Semiconductor Assembly and Test (OSAT) facility under the $10 billion central government chip manufacturing program. Selected applicants will receive a 50% capital expenditure subsidy, according to the scheme. In addition to packaging silicon devices made by foundries and providing testing devices prior to shipping to the market, OSAT facilities offer third-party packaging and test services.
According to CG, the creation of the joint venture, the investment, and the chip testing facility are contingent upon receiving all required regulatory and statutory approvals as well as the successful fulfillment of preconditions that have been mutually agreed upon.
The first company to be approved by the Centre to establish a chip packaging plant in Gujarat was the US-based Micron Technology. The facility will cost $2.75 billion in total, and Micron has stated that it will invest up to $825 million in it.
Although chip packaging and testing are taking off in India, the nation has not yet made headway on a promising proposal to establish a foundry there, which is regarded as the holy grail of the chip industry.
It had received three proposals to establish a foundry; however, none of them had been successful thus far. The proposals came from the Vedanta-Foxconn JV, the international consortium ISMC, which included the Israel-based Tower Semiconductor, and the Singapore-based IGSS Ventures.
Vedanta-Foxconn had announced plans to build a $19.5 billion plant in Gujarat; however, the two companies parted ways in July of last year, severely harming the foundry project. It is believed that a major factor was Vedanta’s ability to pay for purchasing the technology required to produce chips, despite the company being heavily indebted.
