Despite Maharashtra nod, no official communication of Tower-Adani Group chip partnership to Centre

The Indian Express had earlier reported that the announcement last week had caught many in the industry and some in Delhi’s policy circles by surprise. Under India’s $10 billion chip incentive scheme, entities looking to set up chip fabs or assembly plants can avail as much as half the capex costs as government subsidy.

“While states are free to fund plants on their own, the likelihood of that happening is very narrow. They don’t have the required technical capability to assess the veracity of a proposal, and why would any entity looking to set up a chip unit rely on state government funding alone. So if Tower has indeed partnered with the Adani Group, they will confirm that to us in the revised application. So far, they haven’t officially communicated that to us,” a second official said. In fact, neither Adani Enterprises nor Tower Semiconductor had made any public announcement regarding their plant, at the time of publication. Tower Semiconductor and the Adani Group did not respond to an immediate request for comment. While Tower is yet to formally alert the government about its partnership with the Adani Group, a senior industry source said that a fresh proposal will mention the conglomerate’s name.

For some officials in Delhi, the surprise announcement by the Maharashtra government seemed reminiscent of the Vedanta-Foxconn chip plant, which was to first come up in Maharashtra, but then moved to Gujarat, before the partnership between the two ended in 2023, ending any hopes for that plant. At the time, the proposed plant’s shifting base from Maharashtra to Gujarat had also ignited a political storm. However, a senior government official said that the one key difference between the Vedanta-Foxconn and Tower-Adani plans is that the former did not have any experience or technology for making chips. Tower is an established, albeit small, name in the chip business and has the technology to make some legacy nodes.

Many are also seeing the announcement as an election ploy by the state government. “The reason it was announced by the Maharashtra government is certainly keeping an eye on the upcoming Assembly elections. The plant, in any case, will take at least seven years to function, and work will only happen when the central subsidy is approved,” the executive had earlier told this paper.