Zoho Applies for Semiconductor Manufacturing Plant in India

Zoho has filed to the government to set up a semiconductor manufacturing plant in India with a partner, according to co-founder Sridhar Vembu, with the goal of capitalizing on the country's ambitions to become a key player in the global supply chain.

“We have applied with a partner, but the approval is yet to come. There is a stringent evaluation process,” Vembu told ET, without divulging details.

Vembu's response matches recent media reports about Zoho's interest in the segment. According to a recent media story, Zoho intends to enter the chip-making market and has sought government assistance, proposing a $700 million investment. The Chennai-based startup, which sells software as a service and competes with US behemoth Microsoft, is the latest to seek government subsidies in order to get a foothold in the lucrative semiconductor market.

India now has four approved semiconductor chip production and assembly factories, three of which are chip packaging and assembly units, and one chip manufacturing unit being established by the Tata Group-PSMC Group joint venture. In December 2021, India approved a Rs 76,000 crore incentive scheme for applicants, marking the country's first attempt to establish a semiconductor manufacturing ecosystem from scratch.

Though the plan originally included a stacked incentive structure for applicants based on whether they applied for chip manufacturing, OSAT, or ATMP units, it was eventually altered to provide a flat 50% central subsidy to successful applicants based on achievement of objectives.