New Delhi: Zoho Corporation, India’s known software company, recently hit the brakes on its plan to enter the chipmaking business. The company was planning to spend around $700 million to set up a semiconductor factory, but after trying for over a year, they’ve now paused the project. The main reason? They couldn’t find a good technology partner to help them with the complex process of making chips.
What was Zoho planning?
Zoho, known for making affordable software and for running its offices from small towns instead of big cities, had some big ideas. They wanted to set up a $400 million chipmaking plant in Mysuru, Karnataka. If it had happened, it would have been the first chip factory in the state and would have created 460 jobs. The Karnataka government had even approved the project in December.
The chip project was going to be handled by Zoho’s new company, Silectric Semiconductor Manufacturing. They had started hiring people and even formed a board to manage everything.
Why did it stop?
Making chips is not easy, it needs very advanced technology and experienced partners. Sadly, Zoho couldn’t find anyone to team up with who had that level of expertise. Even though Zoho’s co-founder Sridhar Vembu really believes that India should become strong in semiconductor tech, the company had to pause the project. Zoho hasn’t said if they’ll try again later, but for now, it’s on hold.
Not just Zoho, others are struggling too
Zoho’s situation is not unique. Around the same time, Adani Group also paused its own $10 billion chip project with Tower Semiconductor, an Israeli company. This shows that Indian companies are finding it tough to get into chipmaking.
Right now, India doesn’t have even one working chip factory. Even though the government has been trying for years to bring in local and international companies to build them, the progress has been slow.
The Indian government is offering big support, a ₹76,000 crore incentive program that gives 50% subsidy on capital expenses for semiconductor factories. Zoho had applied to set up a special kind of chip plant (for SiC chips) in Tamil Nadu. They even planned to license the technology from a company in Scotland. That project was expected to cost about $600 million.
Still, there are many challenges, India doesn’t have a strong supply chain for chipmaking, there’s a lack of trained people for this work, and there’s tough competition from countries like China, Taiwan, and South Korea. While India has lots of smart engineers (about 20% of the world’s chip designers work from India!), we still need more talent in making and testing chips. Even raw materials like silicon wafers and special chemicals are not easily available here.
What’s Next?
Even though this is a setback, the Indian government and companies are still serious about building a chip industry. Work is going on to train people and set up research programs. Sridhar Vembu also said that Zoho is looking into investing in battery technology, especially for electronics and electric vehicles.
