Renesas Electronics America Inc. and Stars Microelectronics (Thailand) Public Co. have entered into an agreement with CG Power and Industrial Solutions Ltd. to establish an Outsourced Semiconductor Assembly and Testing (OSAT) facility in India.

According to the statement, CG has signed technology and services, offtake and production agreements with Japan’s Renesas Electronics Corporation as well as a technical assistance and technological know-how sharing arrangement with Stars.

The Ministry of Electronics and Information Technology‘s (MeitY) clearance as well as any applicable federal and state subsidies are among the regulatory and legal approvals that the joint venture is subject to.

In a notice to the exchanges, CG Power and Industrial Solutions also stated that subject to certain requirements, CG Power, Renesas, and Stars will contribute up to $205 million, $15 million, and $2 million, respectively, to the equity capital of the joint venture company, with stakes of roughly 92.34 percent, 6.76 percent, and 0.90 percent, respectively.

The approval of government subsidies, board composition, reserved subjects, preemptive and extra subscription rights, right of first offer, tag-along right, put option, and call option are among the important provisions of the agreement.

The JV takes effect when the project is approved. Closing of the proposed project transaction is subject to meeting JV-specific requirements.

In November 2023, CG Power made public that it had applied to the government to establish an outsourced semiconductor assembly and testing plant, with a planned five-year expenditure of around $791 million.

An Indian multinational corporation called CG Power and Industrial Solutions Limited (CGPOWER) develops, produces, and markets goods for power production, transmission, and distribution. In addition, CG Power offers solutions for electrical energy application and management. 

CG Power was established in 1937 in India and has now expanded to become a multinational company. Transformers, switchgear, power SCADA, electric motors, alternators, drives, and traction electronics are among the products offered by the firm. 

The World Semiconductor Trade Statistics (WSTS) predict that worldwide semiconductor sales will expand by 13.1% annually to reach $588.4 billion in 2024, as reported by Nasdaq. This is 2.5% more than the record of US\$574 billion set in 2022 and 13% more than in 2023. 

As per Statista, the semiconductor industry is anticipated to reach around US\$613.10 billion by 2024, with integrated circuits holding a dominant position at US\$500.70 billion. 

Given that semiconductor innovation is required to support cloud data centers and the growth of edge computing, semiconductors used in servers and data centers are projected to become more significant.