Adani pauses talks with Israel's Tower for $10 billion chip foray: Sources

Adani Group pauses $10 billion chip project with Tower Semiconductor, citing strategic and commercial concerns.

Businessman Gautam Adani's group has paused discussions with Israel's Tower Semiconductor for a $10 billion chip project as it did not make strategic and commercial sense for the group, two people familiar with the matter told Reuters.

Maharashtra in September announced approval for Adani and Tower to set up a facility which would produce 80,000 wafers per month and create 5,000 jobs, helping Prime Minister Narendra Modi's ambition of making India a chipmaking hub.

Adani Group had previously said the project was being evaluated, but the talks with Tower have been now been put on hold after the Indian conglomerate's internal evaluation found there was still uncertainty about how much demand - especially in India - the business can generate, said the first source with direct knowledge of the matter.

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"It was more of a strategic decision. Adani evaluated it and decided, let's wait," said the source, adding there is a possibility talks can resume at a later date.

A second source briefed on the matter said Adani Group was not satisfied with the amount of financial contribution Tower was willing to make into the partnership, without disclosing details.

Tower was to provide technological expertise in the deal, but "Adani wanted Tower to have more skin in the game" in financial terms, the person added.