Adani Group to Invest $3 Billion in Semiconductor Business

The Adani Group, based in Ahmedabad, is in advanced talks with two Israeli tech firms to form joint ventures for a new semiconductor business. Sources, who wished to remain anonymous, indicated that while the overall investment could reach $7-8 billion, the initial funding of $3 billion will be used to establish a manufacturing facility and acquire technology from these Israeli companies.

The first semiconductor plant is expected to be operational by 2027. While several locations across India are under consideration, one site in Maharashtra is nearing finalization. On September 6, Maharashtra’s Deputy Chief Minister, Devendra Fadnavis, stated that the Adani Group plans to invest approximately ₹83,947 crore (around $10 billion) to set up a chip manufacturing plant in Maharashtra, but did not provide further details. The Adani Group did not respond to inquiries by the time of publication.

India’s Semiconductor Ambitions

Adani’s initiative aligns with the Indian government’s goal to promote local production of electronics and new technologies. The government aims to reduce dependence on imports, especially from China, for high-end chips used in essential sectors like defense, automotive, communications, and aviation.

In December 2021, the Indian government announced a $10 billion incentive package as part of the India Semiconductor Mission, aimed at boosting investments in chip manufacturing and its related sectors in the country.

India’s demand for semiconductors is rapidly increasing. A report by the India Electronics and Semiconductor Association predicts that India’s semiconductor consumption will rise from $22 billion in 2019 to $110 billion by 2030, positioning the country to capture about 10% of global semiconductor demand.

What Adani Plans to Do

Adani aims to manufacture integrated circuits (ICs) and provide outsourced semiconductor assembly and testing (OSAT) services. These chips will be designed for various applications, including drones, complex computing systems, vehicles, and AI devices.

According to sources, the chips produced by Adani will be for both Indian clients and export markets, including demand from the US. This strategy also aims to limit the flow of sensitive consumer data to Chinese tech firms, a concern shared by many nations due to the critical role semiconductors play in essential industries.

The Adani Group may have a cost advantage because of its own power generation, shipping, and logistics networks. Moreover, owning several major airports and being involved in defense manufacturing provides a built-in customer base for their chips.

However, specific details on revenue targets, expected returns, and production capacity remain undisclosed.

Growing Competition

As India advances in semiconductor production, Adani will compete with other companies, particularly the Tata Group, which is also investing heavily in this sector. Companies like Tata Electronics and CG Power are establishing semiconductor plants in partnership with international firms, and investments have been announced by Micron and Kaynes Technology.

Tata Electronics is constructing semiconductor fabrication plants in Dholera, Gujarat, with Taiwan’s Powerchip Semiconductor Manufacturing Corporation, expecting its first facility to be operational by 2026. The project is projected to cost up to ₹91,000 crore, focusing on chips for power management, display drivers, and high-performance computing.

Meanwhile, CG Power is building an OSAT facility in Gujarat with partners Renesas Electronics Corporation and Stars Microelectronics from Thailand. Additionally, US-based Micron is constructing an ATMP plant in Gujarat, aiming to produce its first chips by 2025.

Strengthening Ties with Israel

Adani’s semiconductor joint ventures could strengthen its relationship with Israel. The group previously partnered with Israel’s Elbit Systems in 2018 to produce military drones. Last year, Adani acquired a 70% stake in the Haifa port, a significant trade hub in Israel, and recently launched an AI-enabled firing system with Israel Weapon Industries.

This investment marks a significant step in India’s semiconductor industry, reflecting a growing trend towards self-sufficiency in technology.