Tower Semiconductor's cancelled deal to merge with Intel at a value of $5.4 billion has generated speculation about whether the company gained or lost from this development. While the focus has mainly been on Intel, who intended to strengthen its chip manufacturing division with Tower's chip factories, less attention has been given to Tower Semiconductor itself.

In the context of the escalating chip war between China and the U.S., Tower Semiconductor has the potential to benefit. As China and the U.S. continue to clash, India aims to become the third-largest economy globally in the next decade. India sees an opportunity to break into the chip market and has set a goal of reaching $300 billion in electronics production by 2026, with around $60 billion dedicated to chip production. The Indian government has been actively promoting the establishment of chip factories within its territory, offering incentives to attract investment. However, progress in India's chip industry has been slow thus far.

Tower Semiconductor was supposed to be the main partner, responsible for technology, in a consortium of companies planning to establish a $3 billion chip manufacturing plant in India. However, due to its ongoing merger discussions with Intel, the announcement did not receive much attention. The Intel deal and the Chinese regulator inquiry halted Tower's involvement in India, frustrating Indian officials. Meanwhile, a $19.5 billion plan to establish a factory by Taiwan's Foxconn, in collaboration with an Indian company, has made limited progress. The only significant success so far has been Micron's announcement of an $800 million investment in a production and assembly plant in the state of Gujarat, western India.

According to Carice Witte, an expert on China and Chairman of the SIGNAL (Sino-Israel Global Network & Academic Leadership), Tower Semiconductor may be able to turn the lost deal with Intel into a victory in India. India, while not considered a superpower, is investing in building infrastructure and does not wish to be overlooked. The UAE, active in India, might be interested in investing in a chip factory to bring Tower to India. While the cancellation fee from Intel, amounting to $375 million, may not be sufficient to establish a new plant, it can serve as initial capital. Tower Semiconductor, having already obtained permission to set up a chip factory in India, could benefit from the growing incentives offered by the Indian government, which has expressed a willingness to provide up to $10 billion in incentives. India is also competing against the U.S.'s grand plans within the Biden administration's CHIPS act.

Finding another buyer for Tower Semiconductor may prove challenging, as most chip companies now require approval from the Chinese regulator to proceed with such transactions. India, however, would welcome Tower Semiconductor as an Israeli company, providing it an opportunity to position itself as an independent chip production area. India's recent shift away from China, while maintaining a balanced relationship with the U.S., allows it to market itself as the new gateway to the chip market.

In summary, while the cancelled deal with Intel presents challenges for Tower Semiconductor, the company may have opportunities in India's growing chip market. By leveraging the cancellation fee from Intel and taking advantage of India's incentives and willingness to position itself as a chip production area, Tower Semiconductor could potentially turn this setback into a success.