CG Power expands into semiconductor design with $36m Renesas acquisition

In a significant strategic move, CG Power and Industrial Solutions Limited, a leader in electrical engineering, has announced the acquisition of the Radio Frequency (RF) components business from Renesas Electronics America Inc. The acquisition, valued at $36 million, is part of CG Power’s foray into the rapidly growing and highly profitable semiconductor design sector. The deal includes intellectual property, tangible assets, and select employees from Renesas’ RF components division, marking a notable step for the Murugappa Group’s ambitions in technology.

The definitive agreement, signed on October 4, 2024, will see CG Power establish subsidiaries to manage this new business. This acquisition positions the company to broaden its operations into semiconductor design, a move that Chairman Vellayan Subbiah described as an opportunity to strengthen India’s presence in this critical industry. Subbiah emphasized that India’s global leadership in semiconductor design would be bolstered by this acquisition, allowing CG Power to innovate and expand in a high-growth market.

Renesas, a key player in the semiconductor industry, sees this as an opportunity to focus on other strategic areas of its business. Davin Lee, Senior Vice President and General Manager at Renesas, said the agreement would enable the RF team to scale and expand under CG’s leadership. The transaction, he noted, would ensure smooth customer transitions while allowing Renesas to better serve its core market.

This acquisition comes on the heels of CG Power’s recent joint venture with Renesas and Stars Microelectronics, aimed at setting up a semiconductor assembly and testing facility in India. The deal underscores CG Power’s aggressive push into the semiconductor industry, an area in which the company had limited exposure before this year. The RF components business had generated $56 million in revenue in 2023, making it a lucrative addition to CG Power’s portfolio.

Regulatory approvals, including the Committee on Foreign Investment in the United States (CFIUS), will be necessary before the deal is finalized. The completion is expected within six months, according to CG Power.

Expert Opinion: Why This Acquisition Matters

Industry analysts have highlighted that CG Power’s move into semiconductor design is a game changer for the Indian market. This acquisition is not just about diversification but about positioning India as a global hub for semiconductor development. Mehra added that with demand for RF components surging in areas like 5G and IoT, CG Power could tap into emerging trends with substantial growth potential.

In the context of global semiconductor shortages and escalating geopolitical tensions, CG Power’s acquisition is seen as a forward-looking strategy that could elevate India’s role in the global tech landscape. The deal could lead to more innovations and collaborations, particularly as the semiconductor market experiences high demand and tight supply chains worldwide.