Adani Group Pauses Semiconductor Project Talks

The Adani Group has temporarily stopped discussions with Israel's Tower Semiconductor regarding a proposed $10 billion chip manufacturing venture in India. This decision comes after internal assessments raised concerns about the project's strategic and commercial viability, particularly regarding uncertain domestic demand.

Strategic Decision Amid Uncertainties

"It was more of a strategic decision. Adani evaluated it and decided, let's wait," a source familiar with the matter revealed, hinting at the possibility of talks resuming in the future. Another concern was the level of financial commitment from Tower Semiconductor, with Adani expecting a more substantial investment from their partner.

Challenges to India's Semiconductor Ambitions

This development poses a new challenge to Prime Minister Narendra Modi's vision of establishing India as a global chipmaking hub. Despite significant policy support, the country still lacks an operational chipmaking plant. The Adani-Tower project's pause follows the collapse of another high-profile semiconductor venture between Vedanta and Taiwan's Foxconn last year.

India's Semiconductor Landscape

India's semiconductor strategy includes ambitious projects like Tata Group's $11 billion chip and testing facility and a $2.7 billion chip packaging unit by US-based Micron. However, doubts remain about the viability of chip production and sales in India's emerging market, as highlighted by Adani's internal analysis.