CG Power and Industrial Solutions Ltd on Wednesday said it has filed an application with the Ministry of Electronics and Information Technology (MeitY) seeking approval to set up an outsourced semiconductor assembly and test (OSAT) facility.

The estimated investment on the project over a period of five years is $791 million and the same is expected to be funded by a combination of subsidy, joint venture partners equity contribution and debt, as required, the company says in stock exchange filing.

Reacting to the development, shares of CG Power and Industrial Solutions zoomed 20% in intraday trade to hit a 52-week high of ₹469.35 apiece on the National Stock Exchange (NSE). The company's market capitalisation rose to ₹71,683 crore after the latest announcement. The stock has gained 74% over the past year and 73% in 2023.

The application also seeks the grant of subsidy for the project under the modified scheme for setting up compound semiconductors, silicon photonics, sensors fab, discrete semiconductors fab and semiconductor assembly, testing, marking and packaging (ATMP) and outsourced semiconductor assembly and test (OSAT) facilities in India.

"It may be further noted that, subject to the project and the subsidy being approved, the Company proposes to implement the same as a Joint Venture in partnership with technology providers/anchor customers, which are under discussion," the filing says.

In July, U.S. chipmaker AMD said it will invest around $400 million in India in the next five years. The planned investment will include AMD's new campus in Bengaluru, which will serve as AMD's largest R&D facility in the world. Through these investments, AMD will drive its semiconductor design innovation and support the government’s Semiconductor Mission.

Micron Technology, one of the world's largest semiconductor companies, had also announced plans to build a new assembly and test facility in Gujarat with an investment of up to $825 million. Micron president and CEO Sanjay Mehrotra said that the chipmaker's new assembly and test facility in Gujarat will be the first for India. "We estimate that our project in Gujarat will create nearly 5,000 direct jobs plus an additional 15,000 jobs in the community over the coming years," Mehrotra said in July.

"The memory products we develop are central to every modern computing device. As computing becomes more pervasive and intertwined in all aspects of our daily lives, many more memory storage packages will be required and our India facility will help us meet the growing demand," he said. "We are hopeful that this investment will help catalyse other investments in the sector, strengthen indigenous manufacturing capability, encourage innovation and support job creation."

CG Power semiconductor

CG Power to set up semiconductor facility; stock leaps 20%