Adani Group’s Semiconductor Facility Dream Falls Apart

India’s Adani group has paused talks with Israel’s Tower Semiconductor for a $10 billion chip project in India as the deal did not make strategic and commercial sense for the group, according to Reuters. 

Last September, Maharashtra, a state in India, announced the approval of a deal between the Adani Group and Israel’s Tower Semiconductor to set up a facility that would produce around 80,000 wafers per month and would give employment to over 5000 people, helping Prime Minister Narendra Modi’s ambition of making India a global semiconductor manufacturing hub. 

The reason for the deal’s fallout remains unclear, but according to various sources, the main reason the Adani Group didn’t move forward with the deal is that the conglomerate’s internal evaluation found uncertainty about demand for these wafers, especially in India. Also, some sources suggest that the Adani Group wasn’t satisfied with the financial contributions Tower was willing to make. 

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With the fallout of this, India has yet again fallen short of finally getting their very own chip fabrication facility. So far, the most high-profile chip project in India has been the development of a $11 billion chip-making and testing facility by the Tata group and a $2.7 billion chip packaging unit by US-based Micron. 

After this development, several other parties have shown a lack of interest in India’s semiconductor industry, which, according to some, is still “nascent” and uncertain. China and the US remain the top consumers of semiconductor chips in the world, with of them accounting for a combined 54% of the global market.