Zoho to invest $700 million in chipmaking

The proposal is being reviewed by a panel and the IT ministry has reportedly asked the firm to provide more clarity on the same
Image used for representation
Image used for representation

BENGALURU: With a proposed investment of $700 million, homegrown SaaS unicorn Zoho is planning a new venture into chipmaking. Though the company did not comment on the development, reports suggest that Zoho has been seeking incentives from the government. It is also said the proposal is being reviewed by a panel and that the IT ministry has reportedly asked the firm to provide more clarity on the same.

Earlier in March, the company’s founder and CEO Sridhar Vembu had announced on X his plans for a semiconductor design project in Tenkasi, Tamil Nadu. It is said that the company has identified a tech partner for setting up a unit. The company’s proposal includes manufacturing compound semiconductors that have specialised commercial applications.

In February this year, the government approved $15.2 billion worth of investments in the establishment of three semiconductor fabrication plants. It approved a proposal from Tata Electronics to build a mega semiconductor fabrication facility in Dholera, Gujarat, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC).

The facility will have the capacity to produce 50,000 wafers a month and it also aims to manufacture three billion chips annually. It will include next generation factory automation capabilities deploying data analytics and machine learning to achieve factory efficiency. With an investment of up to `91,000 crore, the fab will generate over 20,000 direct and indirect skilled jobs.

In March, Prime Minister Narendra Modi laid the foundation stone for two facilities including a semiconductor fab in Dholera and a semiconductor assembly and test (OSAT) facility in Jagiroad, Morigaon, Assam. The country aims to emerge as a major player in the global semiconductor manufacturing industry by 2029.

In FY23, Zoho reported about Rs 8,700 crore revenue and its net profit witnessed an increase of 3% to about Rs 2,800 crore. For Zoho, which is privately held, India is No.3 market, after the US and the EU (European Union). In an interaction with this newspaper last year Vembu had said India has the potential to emerge as the biggest market for the company in the next 10 years.

“India contributes 10% of our total revenues and this will double and in another 10 years it will become the No. 1 market,” he had said.

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