Citing weak local demand and funding gaps, Adani stalls the $10 billion chip project with Israel’s Tower, which is dealing a fresh blow to India’s semiconductor ambitions.
Adani Group has paused its discussions with Israel’s Tower Semiconductor regarding a $10 billion chip manufacturing project in India, citing strategic and commercial concerns, according to a report by The Economic Times.
The Indian conglomerate concluded that the current market outlook, particularly within India, does not justify moving forward at this stage. Internal evaluations highlighted uncertainties about domestic semiconductor demand, prompting the decision to halt negotiations.
A major point of contention was Tower’s financial contribution. While Tower was expected to provide technical expertise, Adani sought a greater monetary stake in the partnership.
This lack of alignment led to the suspension of talks, although the report cited sources who indicated that discussions could resume in the future.
Neither company has issued an official response. The sources requested anonymity, as the matter has not been publicly disclosed.
The proposed facility in Maharashtra was approved by the state in September last year and aimed to produce 80,000 wafers monthly and generate around 5000 jobs. It was positioned as a cornerstone of Prime Minister Narendra Modi’s vision to establish India as a global semiconductor hub.
This latest development deals another blow to India’s chipmaking ambitions, following the collapse of the $19.5 billion Vedanta-Foxconn joint venture in 2023. That project was scrapped amid concerns over costs and delays in securing government incentives.
At present, India lacks a functioning chip fabrication unit. Other key initiatives include Tata Group’s $11 billion manufacturing and testing facilities and a $2.7 billion chip packaging unit by US-based Micron.
Adani’s analysis suggests that the Indian market remains too immature to support full-scale chip production and distribution. The group expressed concerns about ensuring local consumption of chips produced in India, given limited end-user demand.
According to UBS (Union Bank of Switzerland), the US and China account for over half of global semiconductor demand, while India’s share is just 6.5 per cent in 2025. This disparity has raised questions about the viability of large-scale investments in the sector without stronger domestic consumption.
For now, Adani’s chip venture remains on hold, pending further market clarity.
