CG Power zooms 12% on JV to set up semiconductor facility

The counter has gained a marginal 3 percent since the start of the year.

Shares of CG Power and Industrial Solutions Limited zoomed 12 percent to Rs 495 in the morning trade of March 1 after the company signed a joint venture agreement with Renesas Microelectronics and Stars Microelectronics to build and operate an outsourced semiconductor assembly and test facility.

At 9:30 am, the stock was trading at Rs 469, up 6 percent from the previous close on the NSE. The counter has gained a marginal 3 percent since the start of the year.

CG is keen to build semiconductor capabilities and ecosystems in India. Renesas, a leading semiconductor company in Japan, will provide advanced technology and expertise. Stars Microelectronics, a Thailand-based OSAT, will provide technology, the company said.

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The JV will be 92.3 percent owned by CG, with Renesas and Stars Microelectronics holding equity capitals of approximately 6.8 percent and 0.9 percent, respectively. The JV plans to invest Rs 7,600 crore over a five-year period, which will be financed through a mix of subsidies, equity, and potential bank borrowings as required.

The facility will be set up in Sanand, Gujarat, with a capacity that will ramp up to 15 million units per day. It will manufacture a wide range of products and the JV will cater to industries such as automotive, consumer, industrial, and 5G.

"CG’s entry into semiconductor manufacturing marks a strategic diversification for us," S Velleyan, managing director of the company, said. "We are very keen to build out India’s semiconductor capability and ecosystem."

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