Zoho shelves $700 million chip fab plan in Mysuru

Software as a service firm Zoho Corp. is suspending its year-old $700 million plan to expand into chip manufacturing, founder Sridhar Vembu said, announcing the company’s board’s decision.

Vembu, who was until recently the chief executive officer at Zoho before he took up the role of chief scientist at the firm, said “this business is so capital intensive, it requires government backing.”

“On our semiconductor fab investment plan.. we wanted to be absolutely sure of the technology path before we take taxpayer money. We did not have that confidence in the tech so our board decided to shelve this idea for the time being, until we find a better tech approach,” he posted on social media.

On our semiconductor fab investment plan, since this business is so capital intensive it requires government backing, we wanted to be sure of the technology path before we take taxpayer money.

We did not have that confidence in the tech so our board decided to shelve…

— Sridhar Vembu (@svembu) May 1, 2025

Earlier, Zoho formed a subsidiary, Silectric Semiconductor Manufacturing, to manufacture compound semiconductors for specialized applications such as power electronics and electric vehicles.

The multinational software company’s chip-making spin-out applied for incentives under India’s ₹76,000-crore Semiconductor Mission  in June 2023.

In December 2023, Karnataka chief minister Siddaramaiah approved a proposal by Silectric to invest ₹3,425.6 crore in the state’s first electronic manufacturing cluster near Mysuru.

The project was expected to generate 460 jobs.

Zoho now becomes the second firm to abort its chip-making ambitions.

Earlier this week, Reuters reported that Gautam Adani’s group has also paused its discussions with Israel’s Tower Semiconductor for a $10 billion chip project following an internal evaluation by the Indian group.

Vembu is known for his unconventional approach to running his business operations from rural parts of the country.

Valued at $12 billion, Zoho offers cost-effective cloud-based software solutions as an alternative to Microsoft-made software tools.