Adani Group has paused discussions with Israel’s Tower Semiconductor regarding a proposed $10bn semiconductor manufacturing project in India, reported Reuters.

The decision comes after the group concluded that the venture did not align with its strategic and commercial objectives.

The project, which had received approval from Maharashtra state in September 2024, aimed to produce 80,000 wafers per month and create 5,000 jobs.

It was part of Indian government’s push to transform the country into a semiconductor manufacturing hub.

However, internal evaluations by Adani Group revealed concerns over the potential demand for the chips, particularly within the Indian market.

“It was more of a strategic decision. Adani evaluated it and decided, let’s wait,” said a source with direct knowledge of the matter, suggesting that discussions might resume later.

A second source indicated dissatisfaction with Tower’s financial commitment to the partnership.

Tower was expected to contribute technological expertise, but Adani Group wanted them to invest more financially.

“Adani wanted Tower to have more skin in the game,” the source said.

Neither Adani Group nor Tower Semiconductor responded to requests for comment.

One of the sources said that Adani’s review of the sector suggested that the process of manufacturing chips, packaging them, and then selling to customers might not generate substantial local demand, as seen in larger manufacturing hubs like China.

The group believes the project requires “further evaluation about how does India make sure chips manufactured are sold in India. The market is still nascent.”

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