CG Power & Industrial Solutions is making one of the biggest strategic bets in its history by pivoting into semiconductors, hoping that that India's emergence as a global electronics manufacturing hub and the world's growing demand for chips will create a new long-term growth engine beyond its traditional electrical equipment business.
As its semiconductor subsidiary, CG Semi Pvt. Ltd., commenced commercial production at its first outsourced semiconductor assembly and test (OSAT) facility in Sanand, Gujarat, it has crossed a key milestone. The G1 facility, inaugurated in August 2025, has a peak capacity of 300 million semiconductor units annually. Following nearly a year of equipment installation, process stabilisation, customer qualification and workforce training, the plant is now ready to serve customers across automotive, defence, industrial, infrastructure and Internet of Things (IoT) sectors.
For CG Power, however, G1 is only the beginning. Along with Japan's Renesas Electronics Corporation and Thailand-based Stars Microelectronics, the Murugappa Group company is investing over Rs 7,600 crore over five years to build two OSAT facilities. While G1 has entered commercial production, the larger G2 facility is under construction and is expected to significantly expand capacity.
In its latest annual report, Chairman Vellayan Subbiah described semiconductors as being at the heart of technologies such as artificial intelligence, electric mobility, renewable energy and digital infrastructure, all of which are expected to drive sustained demand for chips over the next decade.
The company is also betting on the global realignment of semiconductor supply chains. As manufacturers diversify production beyond traditional East Asian hubs, India is emerging as a preferred destination, aided by the India Semiconductor Mission and generous central and state government incentives.
Rather than focusing solely on manufacturing, CG Power is building capabilities across the semiconductor value chain. Its design arm, Axiro Semiconductor, has developed more than 150 front-end semiconductor IPs and completed over 200 chip designs, which have been deployed in more than 600 million chips globally. The company has also invested in AI chip developer EdgeCortix, signalling its intent to strengthen its semiconductor design capabilities.
CG Semi has simultaneously invested in creating a skilled semiconductor workforce by training Indian engineers, operators and technicians, while equipping the Sanand plant with advanced manufacturing traceability, process controls and in-house reliability testing.
Brokerage Motilal Oswal Financial Services believes the semiconductor business is progressing steadily, and expect it to achieve EBITDA break-even from FY28 as scale improves.
While semiconductor manufacturing remains a long-gestation business requiring patient capital, CG Power is positioning itself as one of the earliest Indian engineering companies seeking to build an integrated semiconductor business. With commercial production now underway and capacity expansion in progress, the company is betting that India's semiconductor ambitions will translate into a significant long-term business opportunity.