Zoho to Invest $700 Million in Semiconductor Manufacturing in India

Zoho is planning to invest USD 700 million in semiconductor manufacturing in India. This decision marks a major shift for the Chennai-based company, which has been a global provider of software solutions. Zoho's proposed investment aligns with India's broader semiconductor agenda, which aims to compete globally.

The company is focusing on the production of compound semiconductors, which are used for specialized applications. Unlike traditional semiconductors that use silicon, compound semiconductors are made from alternative materials. Furthermore, Zoho is seeking government incentives to establish the operation.

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The company has approached the Union government for subsidies under the Production Linked Incentive (PLI) scheme. This scheme is part of the government's efforts to attract investments in the manufacturing sector.

India's semiconductor market is estimated to be worth USD 63 billion by 2026. With Zoho's proposed investment, the company is positioning itself to be a significant player in this growing market.

Status of the Proposal 

This venture is currently under review by India's IT ministry. The ministry has sought more clarity from Zoho regarding its potential customers. In response to this, Zoho has reportedly identified a tech partner to help set up the operation from scratch. However, the name of the firm has not been disclosed.

Reasons for the Diversification

The decision to diversify into chip manufacturing has not been previously reported. In March, Zoho's founder and CEO, Sridhar Vembu, mentioned that the company was planning a  semiconductor project in Tamil Nadu.

However, he did not provide further details at the time. Zoho's annual revenue exceeded USD 1 billion in the financial year that ended in March 2023. With this new venture, the company aims to further diversify its business and contribute to the growth of the semiconductor industry in India.

Zoho's move into chip manufacturing comes at a time when the Indian government is actively promoting the semiconductor industry. The government has put a USD 10 billion package in place to boost semiconductor manufacturing in India with the hope of competing with countries such as Taiwan in a few years.

Read: Polar Semiconductor to Get $120 Million Aid From US Government

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