Taiwanese chipmaker Powerchip Semiconductor Manufacturing Corporation (PSMC) has announced its decision to withdraw from a semiconductor manufacturing project with Japan’s SBI Holding in Miyagi Prefecture. This move comes shortly after PSMC entered a significant partnership with Tata Electronics to support the construction of India’s first AI-enabled wafer fab in Dholera, Gujarat.

On September 26, PSMC finalized an agreement with Tata, which involves providing design, construction, and engineering support for the new fab, backed by an investment of up to ₹91,000 crore (approximately $11 billion). Tata Electronics aims to leverage this partnership to establish a key position in the global semiconductor market. Frank Huang, Chairman and CEO of PSMC, highlighted that this collaboration allows both companies to benefit significantly, particularly as India seeks to enhance its semiconductor manufacturing capabilities.

In contrast, PSMC’s collaboration with SBI was structured around a "Fab IP model," focusing on consulting services rather than direct investment. According to reports from the Nikkei, PSMC cited deteriorating financial performance as the reason for its exit from the Japanese project. SBI, which lacks expertise in semiconductor design, is now exploring new partnerships to continue its plans for a semiconductor plant.

On September 27, PSMC released a statement denying that its withdrawal from the SBI project was due to financial issues. The company emphasized that this decision will not adversely affect its financial standing, as the project involved no direct operational risks.

The shift in focus towards India signifies PSMC's strategic commitment to markets with greater growth potential, reinforcing its role in shaping the future of semiconductor manufacturing in India.