Indian software giant Zoho Corporation, which planned to enter India’s chip manufacturing sector by announcing its $700 million semiconductor project last year, has now shelved that plan.
The decision comes at a time when the Indian government is trying to attract huge investments under the Production Linked Incentive (PLI) scheme to boost the semiconductor industry.
Why did Zoho stop the chip plan?
Zoho founder and CEO Sridhar Vembu himself gave this information through X (formerly Twitter). He said:
- This business is extremely capital intensive and requires government support. So we do not want to take taxpayers’ money until we are fully confident about the technical path.
- He clearly said that the company is not confident about its technology approach yet and the plan will not be taken forward until a better solution is found.
Technology partner is the biggest challenge
According to a Reuters report, Zoho could not find a suitable technology partner for such a large and complex project.
Sources said:
“The company searched extensively but could not find a partner who could support their plan at both technological and operational levels.”
This shows that in the semiconductor industry, not just capital but the right technical knowledge and partnerships are also very important.
What was Zoho’s plan?
- Zoho planned to manufacture compound semiconductors, which are made from materials other than traditional silicon and have specific industrial uses.
- The company had also sought subsidy and support from the central government under the PLI scheme.
- The project was to set up a $400 million (about ₹3300 crores) factory in Karnataka.
What This Means for India and Zoho
For India, this is a temporary setback but also a learning moment. It highlights the importance of building a foundational tech ecosystem, investing in research, and fostering international tech partnerships before expecting large-scale manufacturing projects to succeed.
For Zoho, the move demonstrates responsible corporate governance. Rather than rushing into a project to leverage government incentives, the company chose to step back and reevaluate the technological and financial viability.
As Vembu said:
“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.”
Status of proposed plant in Karnataka
Zoho’s subsidiary Silectric received approval from the Karnataka government in December 2024. The project:
- An investment of ₹3,425.6 crore was proposed.
- It was planned to employ 460 people.
- The plant was to have a silicon carbide-based fabrication unit and an ATMP unit (Assembly, Testing, Marking, Packaging).
- The project was to be set up at Kochanahalli EMC Cluster near Mysu.
Now this plan has also been put on hold indefinitely.
Setback for chip industry in India
Zoho’s plan has been put on hold at a time when the Indian government is building momentum to promote semiconductor manufacturing through:
- PLI scheme
- Design Linked Incentives (DLI)
- and Foreign Direct Investment (FDI).
The Adani Group has also recently put its semiconductor project on hold, indicating that the chip manufacturing ecosystem in India is not yet fully developed.
What are the lessons for industry and government?
The withdrawal of large corporates like Zoho and Adani is a wake-up call for the Indian government and the chip industry. It makes it clear that:
- Chip projects do not run with funding alone.
- Technology expertise, global partners, and clear policy direction are essential.
- The government needs to focus more on R&D and tech transfer.
Conclusion:
Zoho’s $700 million semiconductor dream may be on hold for now, but it’s not the end of the sector. This event makes India think that realizing the chip manufacturing dream requires not just money but a strong technical base, global collaboration, and precise strategy.
Disclaimer: This article is for informational purposes only. Consult a certified financial advisor before investing. MoneyFlowInsight does not take responsibility for any investment decision based on this information.
