Zoho pauses USD 700mn chipmaking plan in absence of tech partner and high capital requirement

New Delhi [India], May 3 : Software giant Zoho has decided to put its ambitious $700 million (approximately Rs5,800 crore) semiconductor manufacturing plan on hold, which came across as a notable setback for India's efforts to build a domestic chip manufacturing ecosystem.

Co-founder and CEO of Zoho, Sridhar Vembu, stated the reason for pause as not sure of the right technology path and significant capital investment required for semiconductor fabrication Plant.

Vembu posted on social media 'X', "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 added, "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,"

As part of the plan, Zoho had planned to invest USD 400 million in a semiconductor facility in Karnataka, it was expected to create 460 new jobs.

Currently, India does not hold a single operational chipmaking facility. The Indian government has been actively promoting domestic chip production through various incentives and it would have come as a huge blow for the government.

Adani Group too has reportedly paused its USD 10 billion plans to enter the chip manufacturing sector through a venture with Israel's Tower Semiconductor.

However, a report by NITI Aayog, the cost of semiconductor chips used in vehicles is expected to double from the current average of USD 600 to USD 1,200 per vehicle by 2030.

Last year, Maharashtra approved Adani Group's proposal to set up a semiconductor manufacturing plant with Israel's Tower Semiconductor, which was expected to create 5,000 jobs.

Earlier on March 6, in a significant milestone for India's semiconductor industry, India Semiconductor Mission (ISM), Tata Electronics Private Limited (TEPL), and Tata Semiconductor Manufacturing Private Limited (TSMPL) signed a Fiscal Support Agreement (FSA) in the presence of Chief Minister of Gujarat Bhupendra Patel for India's first commercial semiconductor fab in Dholera, Gujarat.

This breakthrough agreement, reached at the Gujarat Semi Connect Conference 2025, represents a decisive step forward in strengthening India's technological self-reliance under the modified program for the semiconductor & display manufacturing ecosystem in India.

Tata Electronics' semiconductor fab in the Dholera (SIR) commands a total investment of over Rs 91,000 crore with a capacity of 50,000 wafers starts per month (WSPM). The Government of India, through the India Semiconductor Mission, has committed 50 per cent fiscal support on a pari-passu basis for eligible project costsdemonstrating unwavering national commitment to building a world-class semiconductor ecosystem within Indian borders.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor