Zoho Axes Its $700 Million Semiconductor Manufacturing Venture Amidst Tech Doubts
Zoho's Sridhar Vembu expresses lack of faith in moving forward with $700 million semiconductor project.
Follow Us Zoho has decided to scrap its semiconductor chip manufacturing plans, which were set to cost around $700 million. The company was searching for a suitable technology partner to support its semiconductor division, according to a report by Reuters.
In a post on X, Zoho founder Sridhar Vembu explained that the semiconductor manufacturing industry is notoriously intense when it comes to capital and often requires collaboration with governments. Vembu stated that the company lacked the required confidence in their technology, but expressed eagerness to revisit the idea once a stronger tech approach emerges.
Zoho had initially announced its ventures into the semiconductor manufacturing sector last year, intending to establish a separate division, recruit staff, and form a board. The Karnataka government had also granted approval for the creation of a manufacturing facility in Mysore, pegged at a staggering $400 billion.
The State of India's Semiconductor Dreams
Last year, the Indian government pledged to invest $15 billion to foster a semiconductor manufacturing landscape in the country. This plan, scheduled for implementation over a 4-6 year span, would release funds in phases and offer a 50-70% incentive on project costs. In the proposed budgets of 2024 and 2025, the government allocated Rs 6903 and 7000 crore for the venture.
Following the government's announcement, prominent Indian firms such as Tata, Vedanta, Adani, HCL, and Murugappa Group, along with international players like Micron, Samsung, Foxconn, Tokyo Electron, AMD, and Intel, have expressed interest in contributing to the nascent industry. However, the suspension of Zoho's venture and the halt in Adani Group's joint venture with Tower Semiconductor prolong ongoing uncertainties.
India's semiconductor industry faces significant challenges, including technological hurdles, financial viability concerns, delays in ecosystem development, reluctance from private-sector players, and concerns about job creation. Resolving these issues while maintaining a balance between private investment and public funding will be critical for India's semiconductor ambitions.
[1] Zoho Suspends Semiconductor Manufacturing Plans Over Tech Uncertainty (Reuters)[2] Zoho's Abandoned Semiconductor Play: A Setback for India's Chip Manufacturing Aspirations (The Print)[3] The Future of India's Semiconductor Sector: Challenges and Opportunities (IIT Madras)[4] Technical Challenges and Financial Concerns in India's Semiconductor Ventures (Rediff Business)
- Despite Zoho's withdrawal from a $700 million semiconductor manufacturing venture, other businesses like Tata, Vedanta, Adani, HCL, Murugappa Group, Micron, Samsung, Foxconn, Tokyo Electron, AMD, and Intel are still expressing interest in India's budding semiconductor industry.
- In 2025, the Indian government plans to allocate Rs 7000 crore towards the semiconductor manufacturing initiative, hoping to address the technological hurdles, financial viability concerns, delays in ecosystem development, and reluctance from private-sector players.
- Realizing the semiconductor manufacturing industry's capital-intensive nature and the need for collaboration with governments, Zoho's founder Sridhar Vembu has expressed eagerness to revisit the idea once a stronger tech approach emerges, possibly within the decentralized finance (defi) or technology ecosystems.
- The Indian government's decision to invest $15 billion in fostering a semiconductor manufacturing landscape is a significant step towards reducing the country's dependence on imported semiconductors and increasing its presence in the global market.
- What started as a $700 million venture for Zoho in semiconductor chip manufacturing has now opened up discussions about the importance of financial backing, technological advancement, and an efficient ecosystem for the growth of the Indian semiconductor industry.
- As India strives to establish itself as a major player in the global semiconductor market, the success of its efforts will hinge on a balance between attracting private investment and providing public funding, ensuring job creation, and overcoming technological challenges for a sustainable future in the sector.
