‘We did not have confidence’ says Zoho’s Sridhar Vembu on shelving $700 million semiconductor plans

Zoho has suspended its semiconductor chip manufacturing plans. It had planned to invest about $700 million to establish semiconductor manufacturing facilities. The company was unable to find the right technology partner for its semiconductor businesses, Reuters reported.

Sridhar Vembu, Zoho’s founder, said in a post on X that the semiconductor manufacturing business is very capital-intensive and requires backing from the government as well. He said that they wanted to be certain of their technology capabilities before taking the taxpayers’ money from the government.  

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“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 in the post of X. 

Zoho announced its foray into semiconductor manufacturing in April last year. As per Reuters, the company had established a separate division for the same purpose, hired people, and formed a board. 

Earlier in December, the Karnataka government announced that it had given Zoho the necessary approval to set up a manufacturing facility in Mysore. The project was estimated to cost $400 billion.  

India’s semiconductor dreams: Current situation

Last year, the government announced it plans to invest $15 billion to create a semiconductor manufacturing ecosystem in India. The government set a timeline of 4-6 years to invest the capital at various phases. In the proposed plan, the government aimed to provide an incentive of 50 to 70 percent of the project cost.  In the budget for 2024 and 2025, the government allocated Rs 6903 and 7000 crore for the same.

After the announcement from the government, many prominent Indian companies have invested in the semiconductor industry. The prominent Indian companies like Tata, Vedanta, Adani, HCL, and Murugappa Group have announced their plans to invest in setting up chip manufacturing facilities. 

A joint venture between Indian companies and global semiconductor players like Micron, Samsung, Foxconn, Tokyo Electron, AMD, and Intel is the key to the successful execution of these proposed plans. Many indian companies are at different stages of facility establishment and joint venture negotiations. 

Falling of Zoho’s semiconductor manufacturing plans is a bad sign for the emerging industry.

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