CG Power Strengthens India’s Semiconductor Manufacturing Ecosystem with ₹7,600 Crore Sanand Investment

India’s semiconductor manufacturing capabilities have received a major boost with CG Power and Industrial Solutions Limited expanding its chip assembly, packaging and testing operations at Sanand in Gujarat. The Murugappa Group company, through its subsidiary CG Semi, is developing an advanced semiconductor manufacturing ecosystem supported by international technology partnerships and substantial investments.

The company’s Outsourced Semiconductor Assembly and Test (OSAT) facility began commercial production on July 4, 2026, following its inauguration by Prime Minister Narendra Modi. Developed under the India Semiconductor Mission, the project represents an investment exceeding ₹7,500 crore and aims to establish India as a competitive destination for semiconductor packaging and testing services.

The investment forms part of CG Power’s wider semiconductor strategy, which combines domestic manufacturing through CG Semi with semiconductor product development through Axiro Semiconductor. Together, these businesses expand the company’s participation in the global electronics value chain, from chip design and radio-frequency technologies to semiconductor assembly and testing.

CG Semi Begins Commercial Semiconductor Production at Sanand

CG Semi commenced commercial operations at its Sanand facility on July 4, marking an important transition from pilot-scale operations to commercial semiconductor production. The Prime Minister’s Office confirmed that the facility became India’s third semiconductor plant to begin commercial production in 2026.

The project progressed through several stages before reaching this milestone. Prime Minister Modi laid its foundation stone in 2024, while CG Semi inaugurated its first pilot production facility in August 2025. The initial phase established the technical infrastructure needed for semiconductor assembly, testing and customer qualification.

With commercial operations underway, CG Semi can provide services covering wafer sorting, assembly, testing, package design, failure analysis, product characterisation and test programme development. These processes form an essential part of semiconductor manufacturing, converting processed silicon wafers into packaged chips ready for integration into electronic products.

The facility serves industries requiring reliable semiconductor components, including automotive electronics, industrial equipment, telecommunications, 5G infrastructure and Internet of Things devices.

₹7,600 Crore Investment to Develop Two Semiconductor Facilities

CG Semi is implementing an investment programme exceeding ₹7,600 crore over five years to develop two semiconductor facilities, designated G1 and G2, at Sanand.

The G1 facility, inaugurated in August 2025, was designed as an initial production and technology qualification unit with a processing capacity of approximately 500,000 semiconductor units per day. It supports the development of manufacturing processes, testing capabilities and customer qualification procedures.

The larger G2 facility, located approximately three kilometres from G1, forms the principal capacity expansion component. According to the company’s August 2025 announcement, G2 was scheduled for completion by the end of 2026, with a planned capacity of approximately 14.5 million semiconductor units per day.

Together, the two facilities have a planned combined capacity of approximately 15 million units daily. The government estimates that the project could produce up to five billion semiconductor chips annually once fully ramped up.

These figures represent the facilities’ planned manufacturing capacity rather than their current production output. Actual production will depend on equipment commissioning, customer qualification, manufacturing yields and the progressive expansion of operations.

The company has also projected the creation of more than 5,000 direct and indirect employment opportunities as the manufacturing ecosystem develops.

Renesas and Stars Microelectronics Bring Advanced Semiconductor Technology

CG Semi operates as a joint venture between CG Power and Industrial Solutions, Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics.

According to CG Power’s corporate disclosures, the ownership structure comprises CG Power with 92.34%, Renesas with 6.76% and Stars Microelectronics with 0.90%.

The partnership combines Indian industrial investment with international expertise in semiconductor packaging, manufacturing operations and technology qualification.

Renesas contributes technology for semiconductor packaging formats including Quad Flat Package (QFP), wire-bond Ball Grid Array (BGA), Flip-Chip BGA and Flip-Chip Chip Scale Package technologies. These formats support different requirements involving chip size, electrical connections, processing performance and thermal management.

Stars Microelectronics contributes expertise in established packaging technologies, including Quad Flat No-Lead (QFN) and Small Outline Integrated Circuit packages. Such technologies remain widely used across automotive electronics, industrial control systems and consumer products.

Both international partners also support technical training, equipment qualification and production ramp-up activities. Their participation allows CG Semi to develop expertise across conventional and advanced semiconductor packaging technologies within India.

The collaboration strengthens domestic manufacturing capabilities while connecting the Sanand facility with established international semiconductor supply chains.

Axiro Semiconductor Expands CG Power’s Chip Design Capabilities

Alongside its manufacturing investments, CG Power is developing semiconductor product design capabilities through Axiro Semiconductor Private Limited, a subsidiary established to build a dedicated semiconductor technology business.

The company expanded into radio-frequency semiconductor technologies following its acquisition of Renesas Electronics America’s RF components business in April 2025. The transaction included intellectual property, manufacturing equipment, customer relationships, technical expertise and associated business assets.

Axiro’s portfolio covers radio-frequency and millimetre-wave semiconductor products used in wireless communications, satellite communications and telecommunications infrastructure. These technologies are particularly relevant to high-frequency communication systems, where signal quality, efficiency and compact circuit design are critical.

The business positions CG Power in the semiconductor design and product development segment while CG Semi concentrates on assembly, packaging and testing. This provides the company with exposure to complementary parts of the semiconductor value chain without requiring it to establish a silicon wafer fabrication plant.

Semiconductor Packaging Plays a Critical Role in Electronics Manufacturing

Semiconductor manufacturing involves several interconnected stages, beginning with chip design and wafer fabrication, followed by assembly, packaging and testing.

During wafer fabrication, manufacturers create electronic circuits on silicon wafers using specialised manufacturing processes. The completed wafers must then undergo further processing before individual chips can be incorporated into electronic systems.

OSAT facilities perform these downstream manufacturing operations. They separate individual semiconductor dies, establish electrical connections, protect the devices within suitable packages and test them against performance and reliability requirements.

Modern semiconductor packaging has become increasingly important as electronic systems demand greater processing performance, smaller dimensions and improved power efficiency. Advanced packaging technologies can also support the integration of multiple semiconductor components within compact modules.

CG Semi’s manufacturing capabilities will allow semiconductor companies to undertake more of these operations within India. This can reduce dependence on overseas packaging facilities and create additional opportunities for domestic suppliers of precision equipment, materials and manufacturing services.

India’s Semiconductor Mission Supports Domestic Manufacturing

CG Semi is among the projects approved under the India Semiconductor Mission, the government’s programme to establish a domestic semiconductor manufacturing and design ecosystem.

According to CG Power’s corporate disclosures, the Sanand project has an estimated approved cost of approximately ₹7,584 crore. The company is eligible for central government support of up to ₹3,501 crore under the semiconductor incentive programme, alongside applicable incentives from the Government of Gujarat.

These incentives help address the substantial capital requirements associated with semiconductor manufacturing. OSAT operations demand specialised equipment, contamination-controlled facilities, precision engineering and extensive quality assurance processes.

Government support also seeks to encourage industrial investment and develop a network of domestic companies supplying semiconductor materials, components and technical services.

Sanand has emerged as an important centre for these activities. Micron Technology and Kaynes Semicon established semiconductor assembly and testing operations in the region before CG Semi commenced commercial production in July 2026.

The concentration of multiple semiconductor facilities creates opportunities for shared industrial infrastructure, specialist workforce development and a supporting network of suppliers.

Domestic Semiconductor Production Supports Strategic Industries

India’s expanding semiconductor capabilities are relevant to several industries that depend on reliable electronic components.

Automotive manufacturers require semiconductors for power management, electric vehicle systems, sensors, safety electronics and advanced driver assistance technologies. Telecommunications equipment uses specialised chips for radio-frequency processing, network management and data transmission.

Industrial automation, power electronics and connected equipment also depend on semiconductors designed to meet demanding operational requirements.

Defence and aerospace applications create additional opportunities for qualified semiconductor packaging and testing services, particularly where reliability, traceability and long product lifecycles are essential. Components used in these sectors must undergo appropriate qualification before manufacturers can incorporate them into critical systems.

Developing domestic assembly and testing infrastructure provides Indian electronics companies with greater access to semiconductor manufacturing services. It also strengthens the industrial foundation needed for expanding electronics production under Make in India.

CG Power Builds a Broader Semiconductor Manufacturing Ecosystem

CG Power’s semiconductor investments represent a significant diversification beyond its established businesses in industrial motors, power equipment, transformers and railway systems.

The company’s combination of domestic OSAT manufacturing, international technology partnerships and semiconductor product development creates a platform for participating in the global chip industry.

Its immediate priorities include expanding commercial production at Sanand, completing the planned G2 facility and developing the technical capabilities required to serve semiconductor customers across different industries.

The partnership with Renesas and Stars Microelectronics provides access to established packaging expertise, while Axiro expands the group’s capabilities in specialised semiconductor products.

With commercial production already underway and additional capacity under development, CG Power is helping India establish a stronger position in semiconductor assembly, packaging and testing. The expansion supports India’s broader ambition to develop an integrated electronics manufacturing ecosystem, strengthen domestic technological capabilities and participate more extensively in global semiconductor supply chains.

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References

1. Press Information Bureau, Prime Minister’s Office — July 4, 2026: Prime Minister Narendra Modi Inaugurates CG Semi OSAT Facility in Sanand, Gujarat
2. Press Information Bureau — July 3, 2026: CG Semi OSAT Facility to Begin Commercial Production with Planned Annual Capacity of Five Billion Chips
3. CG Power and Industrial Solutions Limited — August 28, 2025: Official Company Announcement: CG Semi Unveils One of India’s First End-to-End OSAT Facilities in Sanand
4. CG Power and Industrial Solutions Limited — Corporate Disclosure: Semiconductor Investments, CG Semi Joint Venture and Axiro Semiconductor Business
5. Press Information Bureau — August 28, 2025: Inauguration of CG Semi’s End-to-End Semiconductor Assembly and Testing Facility
6. Renesas Electronics Corporation — Official Corporate Disclosure: Joint Venture with CG Power and Stars Microelectronics for Semiconductor Assembly and Testing in India
7. CG Power and Industrial Solutions Limited: Official Subsidiaries and Joint Ventures: CG Semi and Axiro Semiconductor