Indian multinational conglomerate CG Power & Industrial Solutions Ltd. (CG Power) has announced a significant acquisition, purchasing the Radio Frequency (RF) component business of Japan's Renesas Electronics for $36 million (approximately ₹2.54 billion). This acquisition marks CG Power's entry into the semiconductor industry and is aimed at strengthening India's position in semiconductor design and development.

Headquartered in Mumbai, India, CG Power primarily designs, manufactures, and sells products related to power generation, transmission, distribution, and rail transportation. Acquired by the Murugappa Group in 2020, CG Power has gradually become a significant subsidiary of the group. In recent years, with the booming global semiconductor market, CG Power has recognized the immense potential of entering this field. Through the acquisition of Renesas' RF component business, CG Power will gain access to a range of assets, including equipment, intellectual property, inventory, customers, select transferred employees, contracts, and other licenses. These resources will significantly enhance CG Power's capabilities in semiconductor design and help it rapidly expand its market.

According to the agreement, the transaction will include the assets, intellectual property, and related employee transfers of Renesas' RF component business. The completion of the acquisition is expected to take approximately six months, subject to approval by relevant regulatory authorities. Notably, Renesas' RF component business generated annual revenue of approximately $56 million in 2023, while the acquisition price is significantly lower than its annual revenue. Renesas explained that the decision to sell this business unit is part of its strategy to focus on analog and connectivity businesses. By divesting its RF business, Renesas will further optimize its resource allocation and better meet the needs of customers in other priority areas. This transaction also provides an opportunity for the Renesas RF team to expand their business in a new market environment.

CG Power Chairman Vellayan Subbiah stated, "A significant number of semiconductor designers worldwide are Indian. Through this acquisition, we aim to strengthen India's influence in the semiconductor design and development domain, a high-growth, high-profit industry." Following the announcement of this acquisition, CG Power's stock price rose by 3% on the Indian stock market, indicating a positive market reaction. Investors believe that CG Power's expansion into the semiconductor sector has great potential, especially in the rapidly growing Indian market.

Furthermore, CG Power, Renesas Electronics, and Thailand-based Stars Microelectronics are jointly building an outsourced semiconductor assembly and test (OSAT) facility in India. The facility, with a total investment of ₹76 billion, is expected to have a daily production capacity of approximately 15 million chips. These chips will cover a range of packaging types, from traditional packages like QFN and QFP to advanced packages like FC BGA and FC CSP for automotive, consumer, industrial, and 5G markets. CG Power also plans to invest $791 million in a state-of-the-art chip assembly and test plant in India within five years. This investment plan coincides with the Indian government's ambitious goal of building a robust domestic chip manufacturing industry, a sector that has already attracted investment from major tech giants like Apple Inc.

This acquisition not only brings advanced semiconductor technology and resources to CG Power but also presents significant investment opportunities for investors in the Indian stock market. While global chip industry stocks have seen their value increase by trillions of dollars this year, there has been no surge in the market capitalization of chip-related companies in India's $3.7 trillion stock market. Invest India's forecast data indicates that the Indian chip market is poised for strong growth, with an expected market size of $55 billion by 2026. Looking ahead, CG Power will continue to increase its investment in the semiconductor sector and drive the development of India's domestic chip industry. Through continuous technological innovation and market expansion, CG Power is poised to secure a place in the global semiconductor market and contribute to the sustained growth of the Indian economy. This acquisition undoubtedly injects new vitality into CG Power's development and demonstrates the immense potential of India in the semiconductor industry. In the future, with the continuous advancement of technology and market expansion, CG Power is expected to achieve even greater success in the semiconductor field.

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