Zoho’s Ambitious Plan
Indian software firm Zoho plans to enter the chipmaking industry and seeks federal government incentives, according to sources familiar with the proposal. One source estimates the investment at around $700 million.
Company Background
Founded in 1996 and headquartered in Tamil Nadu, Zoho offers subscription-based software and services to businesses in 150 countries, competing with giants like Microsoft and Salesforce. This new venture into chip manufacturing marks a significant diversification for the company.
Government Incentives and Industry Push
Zoho is the latest company to seek government financial incentives for establishing a chip fabrication plant. Semiconductors are crucial to India’s economic strategy, supported by a $10 billion initiative aimed at boosting the industry. India aspires to rival countries like Taiwan in semiconductor production in the near future.
Focus on Compound Semiconductors
Zoho plans to produce compound semiconductors, which are used in specialized commercial applications and made from materials other than silicon. The proposal is currently under review by an IT ministry panel, which has requested more details on Zoho’s intended customers.
Current Status and Future Prospects
Zoho has yet to comment on the proposal, and the IT ministry has not provided an immediate response. The first source revealed that Zoho has identified a technological partner to assist in establishing the operation, although the partner’s name has not been disclosed.
In March, Zoho’s founder and CEO, Sridhar Vembu, mentioned plans for a chip design project in Tamil Nadu but did not elaborate further. This latest move into chip manufacturing had not been previously reported.
Financial Background and Market Outlook
Zoho reported an annual revenue of over $1 billion for the financial year ending March 2023. Earlier this year, the Indian government approved the construction of three semiconductor plants worth over $15 billion by companies including Tata Group and CG Power. These plants will manufacture and package chips for various sectors, including defense, automotive, and telecommunications. India projects its semiconductor market to reach $63 billion by 2026.
Zoho’s venture into chipmaking aligns with India’s broader goals of enhancing its semiconductor industry. With substantial investment and strategic planning, Zoho aims to contribute significantly to this growing sector.
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