Prime Minister Narendra Modi stood inside a sprawling new factory in Sanand, Gujarat. He watched the first batch of packaged chips roll off the line. The date was July 4, 2026. This moment capped years of planning. It signaled tangible progress in India’s bid to secure a place in global semiconductor production.
The facility belongs to CG Semi Private Limited. It represents the third outsourced semiconductor assembly and test, or OSAT, plant to reach commercial output under the India Semiconductor Mission. Initial production targets 200 million chips per year. Plans call for scaling to 500 million and eventually 4.7 billion annually. But numbers alone don’t capture the stakes. Global supply chains remain vulnerable. Geopolitical tensions keep rising. Nations race to localize critical manufacturing.
CG Semi emerged as a joint venture. CG Power and Industrial Solutions Ltd. from the Murugappa Group holds the majority stake. Partners include Renesas Electronics Corporation of Japan and Stars Microelectronics of Thailand. The project carries an approved outlay exceeding ₹7,600 crore. Government support from both central and state levels covers up to half the eligible capital expenditure. That backing proved decisive.
From Pilot Lines to First Shipments
Construction moved fast. The team broke ground and moved from concept to commercial shipments in roughly two years. Executives highlighted the speed. “Today, this first shipment speaks louder than any words,” said Vellayan Subbiah, chairman of CG Power, according to a Morningstar Business Wire report. “It reflects the enormous belief behind these small chips and the combined effort of a remarkable team.”
The G1 facility now operates. A second G2 line sits under development. Together they will handle traditional packages such as QFN, QFP, SOIC, TSSOP and SOP. Advanced formats include flip-chip BGA, CSP and QFN. Target markets span automotive, consumer electronics, industrial systems, infrastructure and 5G applications. Exports will flow to Japan, the United States and Europe. Domestic demand for chips in two-wheelers, cars and factory equipment should absorb much of the rest.
But this isn’t an isolated win. Micron Technology fired up its own assembly, test, mark and pack operation in Sanand back in February 2026. Kaynes Semicon followed in March. Sanand has become a packaging cluster almost overnight. Gujarat itself hosts six approved semiconductor projects worth roughly $14.7 billion in total investment. Tata Electronics prepares a full front-end fabrication plant in Dholera with technology from ASML of the Netherlands. The pieces start to fit.
Industry watchers point to a deliberate sequence. India chose to master packaging and testing before tackling the far more expensive business of wafer fabrication. OSAT facilities require less capital. They generate quicker returns. They create skilled jobs fast. CG Semi expects to support 5,000 direct and indirect positions over five years. Training programs already pull in workers from across the country.
One young employee from Jharkhand spoke with Modi during the inauguration, as captured in social media posts and news coverage. She described leaving her village, completing an ITI course and landing at the plant. Her story underscores a larger ambition. The government wants semiconductor work to reach beyond metros. It aims to build capabilities in smaller towns and among diverse talent pools. And the prime minister used the event to recall a two-decade-old vision for electronics manufacturing in India.
CG Semi’s own website frames the effort clearly. The joint venture draws on CG Power’s decades of manufacturing scale, Renesas’s design expertise and Stars Microelectronics’ specialized OSAT experience. Combined, the partners bring global reach and operational know-how. “We are committed to investing in the development of a manufacturing facility in Sanand, Gujarat,” the company states on cgsemi.com. “This facility is designed to achieve an installed capacity of up to 4.7 billion units annually over the next five years.”
Still, challenges remain. Yield rates must hit world-class levels. Supply of raw materials and specialty gases needs reliable sourcing. Talent retention in a competitive global market won’t come easy. Global competitors in Malaysia, Vietnam and elsewhere continue to expand their own OSAT capacities. India must deliver consistent quality and competitive costs to win major contracts.
Modi framed the occasion in broader terms. Semiconductor growth marks the next phase of the Make in India program. The country seeks to control more of the electronics value chain rather than simply assembling finished devices. Success here could reduce dependence on imports. It might attract further foreign direct investment. It could position Indian firms as credible suppliers to multinational chip customers.
Analysts note the timing. The United States, Europe, Japan and South Korea pour billions into semiconductor incentives. The CHIPS Act, European Chips Act and similar programs reshape investment maps. India’s strategy blends fiscal support with private capital and international partnerships. CG Semi exemplifies that mix. So far the approach yields results. Three plants now ship product. More will follow.
Production volumes will ramp steadily. The first commercial consignments have already left the gate. Initial output focuses on proven packages for immediate markets. Over time the facility will add advanced packaging capabilities. That progression matters. Automotive and industrial customers increasingly demand higher reliability and greater integration. Meeting those specifications at scale will test the operation’s maturity.
Government officials attended in force. Gujarat Chief Minister Bhupendra Patel joined Modi and Electronics and Information Technology Minister Ashwini Vaishnaw. Their presence underscored state-level commitment. Gujarat has marketed itself aggressively as a semiconductor destination. The cluster effect in Sanand and Dholera appears to be working. Suppliers and service providers now eye the region for their own expansions.
Yet realistic expectations matter. Full front-end fabs cost far more than OSAT plants. Tata’s project with ASML represents the next major test. If it advances on schedule, India will move closer to a complete domestic supply chain. Until then, assembly and test provide the foundation. They build skills, generate revenue and demonstrate execution ability.
CG Semi’s launch adds concrete data points to the national story. Two hundred million chips this year. Hundreds of millions more next year. Billions in the longer term. Jobs created. Exports started. Knowledge accumulated. Each step compounds. The factory floor in Sanand now hums with activity. Workers assemble, test and package silicon that will end up in vehicles, phones and machines worldwide.
The moment feels significant precisely because it is tangible. Not a policy announcement. Not a funding pledge. Actual chips. Actual shipments. Real economic activity. For an industry long discussed in aspirational terms, this shift to production marks a welcome change. India still trails global leaders by a wide margin. But the gap has begun to narrow. One facility at a time.
Further details on the event and capacities appeared in The Next Web. Bloomberg covered the production start and long-term targets in its July 4 report. Recent coverage on X highlighted worker stories and the prime minister’s interaction at the site, reinforcing the human element behind the industrial achievement.
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