Zoho Ventures into Semiconductor Manufacturing with $700 Million Investment in India

Zoho has taken a significant step toward establishing a semiconductor manufacturing facility in India, as confirmed by co-founder Sridhar Vembu. This move aligns with India’s ambitions to become a crucial global semiconductor supply chain player. Vembu revealed that Zoho has partnered with another entity and is awaiting government approval, acknowledging the stringent evaluation process involved. Although Vembu did not disclose specific details, it is known that Zoho plans to invest $700 million in this venture. This initiative places Zoho among several companies seeking government incentives to enter the semiconductor market. India already has four approved semiconductor and assembly plants, predominantly in chip packaging and assembly.

India's first major push to build a semiconductor manufacturing ecosystem from scratch came in December 2021 with the approval of a Rs 76,000 crore incentive plan. Initially, the plan had a tiered incentive structure for different types of semiconductor manufacturing applicants, but it was later simplified to offer a flat 50% central subsidy for successful applications. The Tata Group-PSMC Group joint venture is currently the only entity setting up a chip manufacturing unit in India. Zoho's entry into this field underscores the increasing interest and investment in India's semiconductor industry, highlighting the country's potential as a future hub for semiconductor manufacturing.

Vembu criticized the widespread layoffs by global tech companies, labeling such actions as short-sighted and detrimental to employee morale and loyalty. He emphasized that these layoffs, often done to maintain sharp profit numbers despite only a short-term downturn, are not a practice Zoho supports or wants to see developed in India. Over the past months, major tech firms like Google, Microsoft, Meta, Amazon, and Tesla have laid off thousands of employees following a hiring surge during the pandemic. Vembu argued that these layoffs, particularly when done for marginal profit concerns, damage long-term employee loyalty and morale.