Zoho shelves $700 million chip-making plan citing lack of confidence in tech

Software firm Zoho founder Sridhar Vembu has confirmed reports regarding the suspension of its $700 million semiconductor manufacturing plan, citing the lack of "confidence in the tech" for shelving the idea for the time being.

"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," Vembu said via X, confirming the reports regarding shelving of the fab investment plan.

Vembu, however, hinted at a comeback when it finds a "better tech". "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," he said.

The company intended to invest around $400 million in a chip manufacturing factory in Mysuru, Karnataka, which would have generated around 460 jobs, as per Reuters. The initial plan involved developing compound semiconductors for specialised commercial applications. The company was also seeking incentives under the Centre's production-linked incentive (PLI) scheme.

Reports suggest Zoho could not find a suitable technology partner who could have advised it on developing the advanced chips. The suspension of the chip-making plan by Zoho is seen as a setback to the government's efforts to make India a semiconductor hub.

Despite the current setback, India’s ambitious semiconductor mission has made significant strides, with one chip fabrication unit and four testing and packaging plants already having secured government approval under its incentive scheme, launched in 2020 and revised in 2024.

Zoho is a $12 billion private cloud software provider that operates across 150 countries and claims to have more than 120 million users.