After Adani, Zoho Shelves Its $700 Mn Semiconductor Plan

A year after announcing its foray into the semiconductor space, SaaS unicorn Zoho has now put its $700 Mn chipmaking plan on hold. 

Zoho’s founder Sridhar Vembu took to X to announce the development, saying that the company needs surety in its technological path before securing capital and government backing. 

“On our semiconductor fab investment plan, since this business is so capital intensive it requires government backing, we wanted to be absolutely sure of the technology path before we take taxpayer money,” he said. 

For now, Zoho is putting its chip plan on hold till it finds a better way to navigate technological support. 

“We did not have that confidence in the tech so our board decided to shelve this idea for the time being, until we find a better tech approach,” Vembu added. 

A Reuters report, citing sources, said that Zoho is suspending its chipmaking plan as it is facing issues in finding a suitable technology partner for the complex project. 

“Zoho could not find a tech partner despite an extensive search,” sources told Reuters. 

In May last year, the SaaS major reportedly sought Centre’s approval to get incentives under the production linked incentive (PLI) scheme for setting up a chip fabrication plant.

“Zoho is proposing to manufacture compound semiconductors, which have specialised commercial applications and are made from alternatives to the more-commonly used silicon in chipmaking,” a source had told Reuters. 

At that time, the IT Ministry was reviewing the company’s proposal to establish the plant and sought clarity on a few crucial aspects.

Notably, the report last year further said that Zoho already identified a tech partner to set up the chip fabrication plant. 

The company’s plans to hold chipmaking also include $400 Mn investment in a semiconductor facility in Karnataka. 

Last December, the Karnataka government approved Zoho-backed Silectric’s proposal to set up a semiconductor manufacturing unit in the state at the cost of INR 3,425.6 Cr. 

Back then, chief minister Siddaramaiah said that the state’s first semiconductor project would come up near Mysuru which is expected to create 460 jobs. 

Silectric planned to build a silicon carbide-based fabrication as well as assembly, testing, marking and packaging (ATMP) unit. Backed by directors of the SaaS giant, it sought 40 acres of land at the Kochanahalli electronics manufacturing cluster (EMC) cluster near Mysuru. 

The development coincides with another chipmaking plan that has been reportedly put on hold for now while India is looking to bolster chip design and fabrication in the country. 

Gautam Adani-led ports-to-power conglomerate Adani Group reportedly put a pause on its $10 Bn chip venture discussions with Israel’s Tower Semiconductor. This happened due to an internal evaluation which concluded that the project currently lacks strategic and commercial viability.

In September last year, Maharashtra’s cabinet approved Adani Group’s proposal to set up an INR 83,947 Cr semiconductor manufacturing plant with Israel’s Tower Semiconductor. Notably, the project was expected to create 5,000 jobs.

It is pertinent to note that India Semiconductor Mission (ISM) has recently announced Amitesh Kumar Sinha as the new chief executive officer of the country’s semiconductor mission. ISM is aimed at establishing India as a global hub for electronics manufacturing and design. 

The centre is ready with the outline of the next iteration of ISM and the government is also planning to “support” chip design projects in the country and semiconductor packaging designs. 

The second phase of ISM may also offer support for gases and other elements needed for semiconductor production.

India’s semiconductor demand is projected to reach $100-110 Bn by 2030 from the current demand of $45–50 Bn.