Adani Puts $10 Billion Chipmaking Project on Hold Amid Demand Uncertainty

In a significant development for India’s semiconductor ambitions, Adani Group has paused its talks with Israel’s Tower Semiconductor for a proposed $10 billion chip manufacturing project in Maharashtra, according to sources familiar with the matter.

This decision comes as a setback to India’s goal of becoming a global chipmaking hub, a vision strongly backed by Prime Minister Narendra Modi. The project, which was to be set up in Maharashtra, had received state approval in September and was expected to manufacture 80,000 wafers per month while generating 5,000 new jobs in the region.

Internal Evaluation Leads to Pause

While the Adani chip project was initially said to be under evaluation, sources now reveal that Adani has decided to put the talks on hold after a detailed internal assessment. The key reason behind the pause appears to be uncertainty around domestic demand.

“There is still uncertainty about how much demand – especially within India – this business can actually generate,” said a source directly familiar with the matter.

India, despite its growing appetite for digital infrastructure and electronics, still lacks a mature domestic semiconductor consumption base compared to global tech-heavy markets. This makes large-scale chip projects a high-stakes bet.

Financial Participation Became a Point of Discussion

As part of the proposed Adani-Tower chip deal, Israel-based Tower Semiconductor was expected to provide technological expertise. Tower is a contract chipmaker known for producing analog and mixed-signal semiconductors, primarily used in automotive applications.

However, negotiations between the two companies reportedly faced friction when Adani pushed for greater financial involvement from Tower.

“Adani wanted Tower to have more skin in the game,” the source added, suggesting that the Indian conglomerate was looking for Tower to take on a larger financial commitment, possibly to share the investment risk.

This shift in expectation may have further complicated the progress of discussions between the two parties.

Silence from Both Companies

Neither Adani Group nor Tower Semiconductor responded to media queries regarding the project status. The sources, who spoke on condition of anonymity due to the sensitivity of the decision, indicated that no official announcement has been made yet.

The project was widely seen as part of India’s broader push to establish a self-reliant semiconductor manufacturing ecosystem. In recent years, the Indian government has announced a slew of incentives to attract chipmakers amid global supply chain disruptions and growing geopolitical concerns over chip supply.

A Setback, Not a Shutdown

While the Adani chip manufacturing project is not officially cancelled, the pause in talks marks a cautious approach by one of India’s most ambitious conglomerates. Adani Group, known for its rapid expansion across sectors like energy, infrastructure, and logistics, appears to be taking a step back to reassess long-term viability in the tech-heavy semiconductor space.

This pause doesn’t necessarily signal the end, but it does reflect the complexity of building chip plants in a country still developing its tech ecosystem.

The Indian government’s vision of becoming a semiconductor hub will now hinge on how other private players respond, and whether strategic collaborations like the Adani-Tower semiconductor project can be revived under new terms.

🟠 Key Takeaways:

• Adani has paused discussions with Tower Semiconductor for a $10 billion chip plant in Maharashtra.

• The decision comes amid concerns over India’s current demand for semiconductors.

• Financial terms and technology-sharing expectations created friction between the two parties.

• The project had state backing and promised 5,000 jobs, reinforcing India’s semiconductor ambitions.

• Neither Adani nor Tower has issued an official statement yet.