The Murugappa Group, a prominent Chennai-based conglomerate with a diversified portfolio across various sectors, has announced its ambitious entry into the semiconductor assembly and testing business. This venture is being spearheaded through CG Power and Industrial Solutions, an entity originally established by Crompton Greaves, which came under the Murugappa umbrella in November 2020.
The group has disclosed plans to infuse a substantial investment of $791 million over the next five years into this burgeoning sector. This strategic move has notably impacted CG Power’s market standing, with its share prices experiencing a surge of approximately 20% subsequent to the announcement.
To facilitate this foray, the Murugappa Group has initiated proceedings by filing an application with the Union Ministry of Electronics and Information Technology (MeiTY), seeking subsidies for establishing an ‘outsourced semiconductor assembly and testing’ (OSAT) facility within India. The financial structure of the project is expected to rely on a combination of subsidies, joint venture partnerships, equity contributions, and debt financing.
Highlighting the lucrative prospects in the semiconductor market, industry projections indicate substantial growth. The Indian semiconductor sector, valued at $15 billion in 2020, is poised to escalate to an estimated $63 billion by 2026. Similarly, the global Outsourced Semiconductor Assembly and Test Services (OSAT) market is on a trajectory to reach an impressive $76.23 billion by 2028.
This strategic shift marks a significant departure for the Murugappa Group, traditionally recognized for its stronghold in sectors like tubes, cycles, fertilizers, chemicals, sugar, abrasives, and financial services. The entry into semiconductors reflects the group’s strategic alignment with evolving market dynamics and its inclination toward diversification across high-potential industries.
Established in 1900 by A.M.M. Murugappa Chettiyar, the Murugappa Group has evolved from its origins in pre-World War I Burma (Myanmar) as a banking enterprise to its present-day stronghold in diverse industries spanning engineering, agriculture, financial services, and more, consolidating its position as a formidable player in India’s business landscape.
