Indian software company Zoho has paused its US$700 million chip manufacturing plans, according to sources familiar with the situation.

This decision comes as a setback for efforts to establish India as a global semiconductor hub.

The company, valued at US$12 billion, had planned to invest US$400 million in a semiconductor facility in Karnataka, southern India but struggled to find a technology partner.

This project, which was expected to create 460 jobs, received state approval in December 2024.

The initiative was first reported in May 2024, but sources now confirm that the plans have been suspended.

It remains uncertain whether Zoho will revive the project if a suitable partner is found.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ India’s decade-long semiconductor manufacturing struggles follow familiar patterns

Zoho’s setback mirrors India’s historical struggles with semiconductor manufacturing dating back to the collapse of SemIndia in 2006, highlighting a recurring cycle of ambitious announcements followed by implementation challenges 1.

Despite the government’s ₹76,000 crore ($9.4 billion) incentive scheme under the India Semiconductor Mission, companies continue to face fundamental obstacles in establishing fabrication facilities 2.

The challenge isn’t unique to Zoho. India has attempted multiple semiconductor manufacturing initiatives over the past two decades with limited success, creating a pattern where projects are announced with fanfare but later face delays or cancellations 3.

This reflects a broader issue where India consumes significant semiconductor resources (projected to reach $64 billion by 2026) but produces less than 1% of global semiconductors, maintaining a heavy import dependency despite repeated attempts to build domestic capacity 4.

The capital-intensive nature of semiconductor manufacturing, with facilities costing $3-5 billion depending on technology, makes finding the right technology partners and securing financing crucial challenges that have consistently hampered India’s semiconductor ambitions 1.

2️⃣ Technology partnerships remain the critical missing link in India’s chip ambitions

Zoho’s inability to find a suitable technology partner despite an “extensive search” highlights the fundamental challenge facing Indian companies entering semiconductor manufacturing: access to specialized expertise 3.