The Indian software company Zoho Corporation has halted its $700 million plan to enter the semiconductor manufacturing sector. This decision has severely hampered India’s aspirations to become a global centre for semiconductor manufacturing. Zoho Corporation, founded in 1996, is headquartered in Chennai and provides a suite of cloud-based business tools.

Initial Plans for Semiconductor Expansion in Karnataka

In May 2024, a $400 million investment project to establish a compound semiconductor production unit in Karnataka was announced. This program is expected to create roughly 460 jobs and benefit India’s burgeoning semiconductor sector. Nonetheless, the company had difficulty finding a skilled technology partner to help with the complicated chip production process.

Vembu Emphasises Need for Technological Self-Reliance

Sridhar Vembu, CEO and co-founder of Zoho, steers the business towards advancement and innovation. Sridhar Vembu underlined the importance of the nation being technologically independent. Sridhar Vembu continued, “This technology is vital for our country, and we need companies to step up and invest.” Despite government support, Zoho’s board has put the project on hold until a more practical technological route is identified.

Challenges in India’s Semiconductor Ambitions

The suspension of Zoho’s semiconductor venture highlights the challenges that Indian companies face in the capital-intensive and technology-driven chip manufacturing industry. It also underscores the need for strong partnerships and clear technological strategies to achieve India’s semiconductor ambitions.

Setback Follows Similar Pause by Adani Group

Zoho took this action after the Adani Group temporarily halted its $10 billion semiconductor project with Tower Semiconductor of Israel.

Focus Returns to Core Software Business

While Zoho has halted its plans to enter chipmaking, the company focuses on its core software business, which serves over 150 countries with cloud-based solutions. Zoho remains committed to contributing to India’s technological advancement through other means.

Government’s Continued Push for Semiconductor Investment

Through initiatives like the $10 billion incentive package offered by the India Semiconductor Mission, the Indian government can still invest in semiconductor production.

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