Indian software company Zoho has abandoned its year-long effort to enter semiconductor manufacturing with a $700 million investment, dealing a setback to India’s ambitions of becoming a global chipmaking hub, according to sources close to the matter.
Indian software firm Zoho has suspended its 700 million semiconductor manufacturing plan due to difficulties finding a techpartner, dealing a blow to 10 billion chip project, hindering PM Modi’s semiconductor push.
One source cited difficulties in securing a suitable technology partner to guide the intricate chip fabrication processes as a key reason for the suspension.
This development follows news that Indian conglomerate Adani Group, led by billionaire Gautam Adani, has also paused talks with Israel’s Tower Semiconductor over a proposed $10 billion chip project after an internal review.
Zoho, valued at approximately $12 billion, is known for providing cost-effective alternatives to cloud-based software from major players like Microsoft. Its billionaire co-founder, Sridhar Vembu, has gained recognition for his unconventional strategy of basing operations in rural areas.
As part of its diversification strategy, Zoho had intended to invest $400 million in a semiconductor plant in Karnataka, southern India. Vembu has previously emphasized the strategic importance of semiconductor technology for India’s self-reliance.
However, despite an extensive search, the company failed to find a technical collaborator, leading to the suspension of the entire project, two unnamed sources revealed. It remains uncertain whether Zoho will revisit the plan if a partner emerges in the future. A company spokesperson declined to comment.
Karnataka state officials did not immediately respond to requests for comment.
Zoho’s withdrawal marks another challenge for Prime Minister Narendra Modi’s push to establish India as a semiconductor manufacturing destination. Despite incentives, India still lacks an operational chip fabrication facility.
Founded in 1996, Zoho provides subscription-based software services to businesses across 150 countries, employing over 18,000 people and serving more than 120 million users.
Last year, Zoho’s subsidiary, Silectric Semiconductor Manufacturing, recruited a small team and formed a board to oversee its semiconductor ambitions, according to one source.
In December, the Karnataka government had hailed Zoho’s proposed $400 million Mysuru facility as a landmark project, expected to create 460 jobs and become the state’s first semiconductor venture.