Indian software giant Zoho is exploring a potential $700 million investment in chip manufacturing, with a focus on compound semiconductors tailored for specialised applications. This initiative, currently under scrutiny by India's IT ministry, aligns with the nation's semiconductor agenda, aimed at bolstering global competitiveness. Zoho is seeking government incentives to facilitate the establishment of this venture, as part of its strategy to diversify its business portfolio.

Established in 1996 and headquartered in Tamil Nadu, India, Zoho provides software and related services to businesses across 150 countries, competing with industry giants like Microsoft and Salesforce. Joining a trend among companies seeking government support, Zoho is now among those vying for financial incentives to set up a chip fabrication plant.

Semiconductors occupy a pivotal position in India's economic agenda, with the government implementing a $10 billion package to fortify the industry's capabilities, positioning the nation to rival established players like Taiwan in the coming years. Zoho's proposal entails manufacturing compound semiconductors, which offer specialised commercial applications and are crafted from alternative materials to silicon, commonly used in chip production.

The proposal is currently undergoing evaluation by the panel overseeing India's chip initiatives within the IT ministry. The ministry has requested further details from Zoho regarding its prospective client base. Although Zoho declined to comment, sources familiar with the matter revealed that the company has earmarked a substantial investment of $700 million for this venture. Additionally, Zoho has identified a technology partner to assist in establishing the operation, although the partner's identity remains undisclosed.

Sridhar Vembu, Founder & CEO, Zoho hinted at a chip design project in Tamil Nadu, underscoring the company's ambitions in this domain. While Zoho's plans to diversify into chip manufacturing have not been previously reported, the company's annual revenue surpassed $1 billion in the fiscal year ending March 2023, according to media sources.

India's semiconductor sector is witnessing significant momentum, with the government approving the construction of three semiconductor plants valued at over $15 billion. These plants, spearheaded by entities like Tata Group and CG Power, aim to produce and package chips for critical sectors such as defense, automotive, and telecommunications. With India projecting its semiconductor market to reach $63 billion by 2026, Zoho's potential entry into chip manufacturing underscores the nation's ambitions to establish a robust semiconductor ecosystem.

(Source: Economic Times)