Adani Group pauses talks with Israel’s tower semiconductor on $10 billion chip project: Report

The Adani Group has paused its discussions with Israel’s Tower Semiconductor for a proposed $10 billion chip manufacturing venture in India, as the project currently lacks strategic and commercial viability, two sources familiar with the matter told Reuters.

The semiconductor facility, initially announced in Maharashtra in September, aimed to produce 80,000 wafers per month and create around 5,000 jobs, aligning with Prime Minister Narendra Modi's push to make India a global chipmaking hub. While Adani had earlier said the project was under evaluation, sources now say internal assessments revealed concerns over uncertain domestic demand.

"It was more of a strategic decision. Adani evaluated it and decided, let's wait," one source said, adding that talks could resume later.

Another person briefed on the matter said Adani was dissatisfied with the level of financial investment Tower was willing to commit. Although Tower was expected to bring technological expertise, "Adani wanted Tower to have more skin in the game," the source said.

Neither Adani nor Tower responded to Reuters’ queries. Both sources requested anonymity as the decision has not been officially disclosed.

Tower Semiconductor specialises in analog and mixed-signal chips, primarily used in automobiles. The potential withdrawal from this joint venture marks a fresh challenge for PM Modi’s semiconductor ambitions. India still lacks an operational chipmaking plant despite major policy support.

The shelving of Adani’s plans follows the collapse of a proposed $19.5 billion semiconductor venture between Vedanta and Taiwan’s Foxconn in 2023 due to concerns over project costs and delays in government incentives.

India’s current semiconductor strategy includes high-profile projects such as Tata Group’s $11 billion chip and testing facility and a $2.7 billion chip packaging unit by US-based Micron.

Adani’s internal analysis reportedly raised doubts over the viability of chip production, packaging, and sales in India’s nascent market. “The project required further evaluation about how does India make sure chips manufactured are sold in India,” one source told Reuters.

A recent UBS report estimated that the US and China together make up 54% of global semiconductor end-demand, while India accounts for just 6.5% in 2024.

(With inputs from Reuters)

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