Zoho Eyes Semiconductor Foray, Plans $700 Mn Investment To Set Up Chip Fabrication Unit

Sridhar Vembu-led SaaS unicorn Zoho is reportedly looking to enter the semiconductor space and has applied to the Centre to seek approval to get incentives under the production linked incentive (PLI) scheme for setting up a chip fabrication plant.

The bootstrapped company is estimating an investment of around $700 Mn to set up the unit, Reuters reported citing sources.

“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,” the report quoted a source as saying. 

The company’s proposal is under the IT ministry’s review. The ministry has also sought more clarity from Zoho on the customers it intends to do business with. 

Citing one of the sources, the report also said that Zoho has already identified a tech partner to set up the chip fabrication plant.

Zoho declined to comment on Inc42’s queries on the development.

The latest development comes almost two months after Vembu said in a post on X that Zoho was planning a semiconductor design project in Tenkasi district of Tamil Nadu. 

Zoho’s plans to get into the semiconductor space also come as a big boost for the government, which has taken a number of initiatives to promote semiconductor manufacturing in the country.

The Centre has allocated INR 76,000 Cr under the Semicon India programme to develop the semiconductor and display manufacturing ecosystem in the country.

Earlier this year in February, the union cabinet approved the country’s first semiconductor fab to be set up by the Tata Group, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC), with a net investment of INR 91,000 Cr. 

Further, it also greenlit two other semiconductor proposals of Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) and CG Power and Japan’s Renesas. 

As per Inc42 analysis, the size of India’s semiconductor industry is expected to surpass the $150 Bn mark by 2030, growing at a 24% compound annual growth rate (CAGR) between 2023 and 2030.

While semiconductor manufacturing is capital intensive, it is unlikely to be an issue for the deep-pocketed Zoho. The company’s operating revenue zoomed 30% year-on-year to INR 8,703.6 Cr ($1 Bn) in the financial year 2022-23 (FY23), while net profit rose 3% to $340 Mn. 

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