In a major development for India’s semiconductor ambitions, the $10 billion chip manufacturing project planned by Israel’s Tower Semiconductor and Adani Group in Maharashtra has been temporarily put on hold.
The decision comes after an internal review by the Adani Group, which raised concerns over the project’s commercial feasibility and Tower Semiconductor’s limited financial contribution. The plant, approved in September 2024, was expected to produce 80,000 wafers per month and generate around 5,000 jobs.
Project Details
- Location: Panvel, Maharashtra
- Objective: Strengthen India’s position as a global semiconductor hub
- Government Support: The Indian government has been actively promoting foreign investments in the sector, targeting a projected $63 billion market by 2026
Despite previous setbacks, such as Foxconn pulling out of a $19.5 billion joint venture with Vedanta, the government remains committed to its semiconductor ambitions.
Why the Project is on Hold
Sources highlight several reasons for the pause:
- Domestic Demand Uncertainty: India currently accounts for only 6.5% of global semiconductor demand, raising concerns about long-term viability.
- Financial Considerations: Adani sought a larger capital contribution from Tower Semiconductor, which was mainly expected to provide technology expertise.
- Strategic Fit: The project did not align with Adani Group’s broader strategic goals at this stage.
Impact on India’s Semiconductor Ecosystem
The pause highlights the challenges India faces in establishing a strong semiconductor manufacturing base.
- Other ongoing projects include Tata Group’s $11 billion chip facility and Micron’s $2.7 billion packaging unit.
- Limited domestic demand and reliance on foreign investment remain key hurdles.
Aligning large-scale investments with market realities and strategic priorities will be crucial as India works toward becoming a global semiconductor hub.