IMAP India: Industrials Update March 2024

Recent News

• The Inian  launched the Indian AI Mission with a budget outlay of ~US$ 1.25 Bn to foster innovation in AI through public-private partnerships (PPPs) including investing in financing deeptech startups
• India’s manufacturing PMI grew to 59.2 in March from 56.9 in the previous month; a PMI value above 50 indicates growth
• A big event on the EV calendar was the launch of Chinese tech giant Xiaomi's debut electric car, the SU7. Aggressively priced, the SU7 is expected to compete head-to-head with Tesla, BYD and others
• As a boost for urban mobility, the Indian PM inaugurated multiple metro and connectivity projects worth ~US$ 2 billion including Kolkata’s underwater metro tunnel
• Inda’s merchandise exports increased 11.9% y-o-y to a 11-month high of $41.40 bn in Feb’24 while imports increased 12.2% to $60.11 bn

Selection of Recent Transactions

DATE             TARGET                                ACQUISITION

Mar 2024       Newspace Research         The drone manufacturer raised ₹273 Cr. in a fundraise led by Cornerstone Ventures

Mar 2024       Bonatras                             Jupiter Wagons acquired the auto component manufacturer for ~₹270 Cr.

Mar 2024       Biocon Biologics                Eris life sciences acquired the branded formulations of Biocon for ₹1,242 Cr.

Mar 2024       Lohum Cleantech              The Li-Ion battery manufacturer raised ~₹447 Cr. in a fundraise led by Singularity AMC

Mar 2024       Vodafone                            ATC Telecom acquired a 2.9% stake for ₹1,600 Cr. as a strategic investment round

Mar 2024       Vasant Chemicals             ICIG acquired a majority stake in the specialty chemicals manufacturer for an undisclosed amount

Semiconductor Packaging – the big rush in India!

Semiconductor packaging refers to the process of enclosing integrated circuits (ICs) or microchips, in a protective casing or package). The packaging serves several important functions such as protecting the semiconductor components from damage, providing electrical connections for input and output signals, dissipating heat generated, etc.

While India has been trying to build mega semiconductor factories, it is simultaneously looking at different approaches to capture a share of the global semiconductor supply chain. An important aspect of manufacturing semiconductor chips is packaging and testing  (representing about 15% of the semicon value chain) which could be outsourced by a semiconductor foundry to a specialized 3rd party or OSAT (Outsourced Semiconductor Assembly and Testing). OSAT providers have expertise in packaging technologies; selecting appropriate package types (legacy to advanced packages), mounting the chips onto packages, connecting them to external pins or solder balls and encapsulating the chips in protective materials. ATMP (Assembly, Testing, Marking and Packing) and OSAT are terms that are used interchangeably; ATMP is a broader term and is used when semicon manufacturers perform the packing and testing inhouse.

The overall size of the global OSAT industry is estimated to be ~US$ 45 billion and growing at 6% - 9% wherein Taiwan and China dominate with a combined market share of 75 %. To push for the development ofthe semiconductors manufacturing ecosystem in India, the government has put together an outlay of over US$ 10 billion which includes fiscal support of 50% of capex for setting up semiconductor ATMP/OSAT facilities; an additional 20% support from the state is also available. As OSATs build capability by learning the product, technology and process, they could then expand along the semiconductor value chain.