When investors talk about India’s next big leap in manufacturing, semiconductors inevitably come up. Recently, CG Power & Industrial Solutions has taken a bold step into this high-growth sector through its subsidiary, CG Semi, by launching India’s first end-to-end OSAT (Outsourced Semiconductor Assembly and Test) facility in Sanand, Gujarat. This move positions CG Power as not just a traditional industrial powerhouse but also a forward-looking company preparing to ride the semiconductor wave.
Why This Step Matters
OSAT facilities are critical in the semiconductor supply chain. While chip designing and wafer fabrication often grab headlines, assembly, packaging, and testing are equally important to ensure chips are safe and reliable for use in everyday devices like smartphones, automobiles, and industrial machines.
With its new OSAT facility, CG Power will offer end-to-end solutions—from chip assembly to packaging and testing—within India. This strengthens the country’s ambition of becoming self-reliant in semiconductors, reducing dependence on global supply chains.
Investor Confidence on Display
The market reacted positively to this announcement, with CG Power’s shares climbing intra-day. For investors, this isn’t just news—it’s a signal. A traditional engineering and industrial company diversifying into semiconductors is seen as a long-term growth opportunity, especially given the government’s push for domestic semiconductor production.
A Legacy of Strength Backed by Murugappa Group
As part of the Murugappa Group, CG Power already has a strong foothold in India’s industrial and power systems sector. The company has built its reputation on products like transformers, motors, switchgears, and railway signaling equipment, with a presence both in domestic and global markets.
But this new move goes far beyond its core business. By entering semiconductors, CG Power is not just expanding its portfolio—it is venturing into one of the most strategically important and fastest-growing sectors of the global economy.
The Partnership That Powers the OSAT Facility
CG Power isn’t doing this alone. The company has tied up with two international leaders:
- Renesas Electronics (Japan) – a global giant in semiconductor solutions.
- Stars Microelectronics (Thailand) – a specialist in assembly and testing services.
Together, they will invest ₹7,600+ crore (around $870 million) over the next five years in building this OSAT ecosystem.
The facility will come up in two phases:
- G1 Facility: Already operational, with peak handling capacity of 0.5 million units per day. Commercial production is expected in 2026.
- G2 Facility: Under construction, targeting 14.5 million units per day by the end of 2026.
This scale of operations shows the ambition behind the project—it’s not just a pilot but a serious long-term bet on semiconductors.
Opening Doors to High-Demand Sectors
For CG Power, the semiconductor venture means much more than just diversification. It opens doors to high-growth sectors such as:
- Automotive – especially as EV adoption accelerates.
- Defence – where secure, locally-produced chips are crucial.
- Infrastructure – which increasingly relies on smart systems.
- IoT (Internet of Things) – a sector set to explode as India digitizes further.
Strong Financial Base for Expansion
CG Power is entering this new venture from a position of strength. The company recently reported its highest-ever standalone quarterly revenue and profit before tax. In addition, its order backlog of ₹11,971 crore provides strong revenue visibility for the coming quarters.
This robust financial foundation gives CG Power the ability to take on a large, capital-intensive project like semiconductors without overstretching itself.
Aligning With India’s Semiconductor Push
The Indian government has been actively encouraging companies to invest in semiconductors through policy support and incentives. By launching an OSAT facility, CG Power is perfectly aligning itself with these industry tailwinds.
As digital adoption, electric vehicles, and infrastructure development accelerate, the demand for semiconductors will only grow. CG Power’s presence in this space ensures it is well-positioned to capture long-term value creation.
The Road Ahead
The launch of India’s first OSAT facility is more than just a new project for CG Power—it’s a transformational moment. It marks the company’s evolution from a traditional industrial solutions provider into a tech-driven enterprise with exposure to one of the world’s most crucial industries.
If successful, this venture could establish CG Power as a key player in India’s semiconductor ecosystem, while also creating value for shareholders. With its strategic partnerships, financial strength, and the backing of Murugappa Group, CG Power is setting itself up for sustainable, diversified growth.
In simple terms: CG Power is building chips for India’s future—and investors are taking note.
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Yash Vora is a financial writer with the Informed InvestoRR team at Equentis. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.
