Indian ports-to-power conglomerate Adani Group has partnered with Israel's Tower Semiconductor to invest $10 billion to set up a chip manufacturing unit at Taloja, near Mumbai.

The announcement was made by Devendra Fadnavis, deputy chief minister of the state of Maharashtra, in a post on X. Around $7 billion would be invested in phase one of the project and the rest in the second phase.

The project is intended to have a monthly production capacity of 40,000 wafers in the first phase and 80,000 wafers in the second phase. It will generate over 5,000 jobs. However, the deputy chief minister didn't share a timeline of the project.

Interestingly, India's largest business, Reliance Industries, was in the news some time ago for being in talks to acquire Tower Semiconductors. Last year, Intel was also in discussions to acquire Tower Semiconductors before mutually terminating the acquisition. 

The investment is in line with the country's vision to grow its profile and presence in the global chip industry. The Indian government aims to become self-reliant in this sector and hopes to generate jobs through the semiconductor sector. Earlier this month, India and Singapore agreed to collaborate in semiconductors during Prime Minister Narendra Modi's two-day visit to the country.

The ongoing trade war being the US and China is benefiting countries like Malaysia and India, which have emerged as neutral destinations in which to manufacture chips. However, India's chipmaking industry is in its infancy and will require sustained investment to grow. In comparison, Infineon, AT&S, Micron, Texas Instruments and Intel have recently invested to boost their presence in Malaysia.

Earlier this year, the Indian government approved an investment of $15.2 billion to set up three semiconductor plants, including the country's first fab unit to be set up by Tata Group and Taiwan-based Powerchip Semiconductor Manufacturing Corp (PSMC).

A few years ago, India had also offered a $10 billion incentive to appeal to global chipmakers to set up units in the country. As part of this, the US chipmaker Micron Technology had established a $2.75 billion assembly unit in the state of Gujarat.