CG power ties up with Renesas, Stars Microelectronics for chip plant in India

CG Power and Industrial has entered into a joint venture with Renesas Electronics America Inc and Stars Microelectronics (Thailand) Public Co. to set up an outsourced semiconductor assembly and testing (OSAT) facility in India, the company said. 

The Mumbai-based electrical manufacturing firm, earlier known as Crompton Greaves Ltd, said in an exchange filing that the joint venture will come into effect on the necessary regulatory and statutory approvals of the proposed project.

The company has also applied for subsidies from central and state governments. 

CG, Renesas, and Stars have committed to investing $205 million, $15 million, and $2 million towards equity capital of the JV company, representing about 92.34%, 6.76%, and 0.90% respectively. 

The terms of the agreement include approval and receipt of subsidy from central and state governments, board composition, reserved matters, preemptive and additional subscription rights, right of first offer, tag along right, put option, and call option.

CG has also signed an agreement on technology and services, and offtake and manufacturing agreement with Renesas Electronics Corporation, Japan. 

Another agreement with Stars includes technology know-how sharing and technical support. 

In a separate development, Israel-based chip manufacturing company Tower Semiconductor has submitted a proposal to set up a chip fabrication plant in India worth around $8 billion, The Indian Express reported. 

Tower is likely to invest up to $4 while the government will provide $4 billion as part of its scheme for the development of semiconductors and display manufacturing ecosystem in India. The scheme provides fiscal support of 50% of project cost on a “pari-passu basis” for all technology nodes. 

The state government where the plant is set up may also provide some benefits to the company.