Zoho has reportedly paused its year-long effort to enter the semiconductor manufacturing space with a plan worth $700 million. This marks another setback for the Indian government's ambitious semiconductor push.
As per sources cited in a report by moneycontrol, the software company faced difficulties in securing a suitable technology partner to guide it through the complex chip manufacturing process. Meanwhile, the Gautam Adani-led group has also halted talks with Israel's Tower Semiconductor for a chip project worth over $10 billion. According to the report, the conglomerate paused discussions following an internal evaluation of the project.
Zoho had earlier planned to invest $400 million in a semiconductor facility in the southern Indian state of Karnataka to diversify its business. However, the entire chipmaking initiative has been put on hold for now, as per sources cited in the report. "Zoho could not find a tech partner despite an extensive search," one of the sources told Reuters.
Last year, the Karnataka state government announced that it had granted landmark approval for Zoho's proposed $400 million facility in the Mysuru region, As per the earlier plans, the project was expected to create 460 jobs.
India's Semiconductor dream on hold?
The pause on these two major projects comes as a major blow to India’s hopes of building a strong semiconductor industry and becoming a global player in the sector.
However, the government continues to provide significant fiscal support to the sector. During this year's budget, the centre approved the Semicon India programme with an overall outlay of Rs 76,000 crore. This was largely aimed at developing the semiconductor and display manufacturing ecosystem in the country.
Alongside this, the government is also providing Product Design Linked Incentives in order to spur development in chip manufacturing industry
"Product Design Linked Incentive of up to 50% of the eligible expenditure subject to a ceiling of Rs 15 Crore per application and also 'Deployment Linked Incentive' of 6% to 4% of net sales turnover over 5 years subject to a ceiling of Rs 30 Crore per application for incentivising chip design," the centre said in a release last month.
