Tower Semiconductor Withdraws from $10 Billion Chip Plant Project in India

16 May, 2025

Company sees strong Q1 growth, with rising RF and power management sales; expands into envelope tracking as part of evolving market strategy

Tower Semiconductor, based in Migdal HaEmek, Israel, has withdrawn from a long-standing partnership that competed over the past 13 years in a $10 billion public-private initiative to establish a semiconductor fabrication plant in India. During a conference call following the release of its financial results this week, the company stated it had decided to exit the project “for good reasons,” without elaborating further. The project had been in motion for years, beginning with the Indian government’s strategic push to build a local semiconductor industry. In 2013, Tower’s proposal was selected by the Indian authorities, but progress remained sluggish and no final decision on funding was ever made.

By the end of 2024, the project appeared to gain traction with all necessary approvals in place, aiming to build a facility employing around 5,000 people and reaching a monthly production capacity of 80,000 silicon wafers. Tower was slated to be the technology partner, providing manufacturing process expertise and operational know-how. However, once again, the initiative stalled. Two weeks ago, Reuters reported that Tower’s main partner in the venture, India’s Adani Group, had ceased all negotiations with Tower, citing economic impracticality due to lower-than-expected local demand.

Other sources told Reuters that Adani was also dissatisfied with the scale of Tower’s financial commitment to the project. Tower CEO Russell Ellwanger noted, in response to a question, that the company had made the independent decision to withdraw from the project about six months ago but chose not to issue a formal press release at the time.

Strong Q1 Performance and Growth Outlook

Despite the setback in India, Tower posted encouraging results for the first quarter of 2025. Revenue increased by approximately 9% year-over-year, reaching around $358 million. The company also issued a positive growth outlook for the remainder of the year, particularly in the second half, driven by capacity expansion investments—primarily in its joint ventures with Intel and STMicroelectronics.

Shift in Revenue Mix

An interesting shift was noted in the company’s Q1 revenue mix. Sales to the RF (radio frequency) market strengthened, particularly in Silicon Photonics (SiPho) and Silicon Germanium (SiGe) technologies, alongside growth in the power management components segment. Power management revenue grew from 10% of total sales in Q1 2024 to 18% in Q1 2025, while RF revenue rose from 14% to 22% over the same period. CEO Ellwanger projected that the RF market could double in size in 2025.

In response to developments in the power management market, Tower has begun entering a new segment: envelope tracking. This niche technology allows power supplies to continuously adjust voltage supplied to amplifiers, optimizing performance and energy efficiency. Following the earnings release on Wednesday, Tower’s stock rose by roughly 7% on Nasdaq, with the company now valued at approximately $4.7 billion.

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