Zoho ventures into semiconductor manufacturing.

Leading Chennai-based software business Zoho has applied to the Indian government to establish a semiconductor fabrication plant there.

With a planned $700 million investment, this move represents the company's entry into the semiconductor manufacturing industry. The plant's primary function will be to produce compound semiconductors for niche markets.

The application is a component of Zoho's larger plan to broaden its business and transform into a "holistic technology company" that offers data centers, cloud infrastructures, software and hardware integration, and more. After a rigorous screening procedure, the corporation has already chosen a tech partner to establish the unit, and it is currently seeking government approval.

Zoho ventures into semiconductor manufacturing.
Image by ET Telecom

The semiconductor market in India has grown significantly in the last few years. It is expected to reach $100.2 billion by 2032, with a compound annual growth rate (CAGR) of 20.1% for the forecast period. In 2023, the market was valued at $34.3 billion. A total of Rs 76,000 crore (USD 9.3 billion) in incentives have been granted by the government to attract semiconductor companies and create a manufacturing ecosystem within the nation.

Zoho's entry into the semiconductor manufacturing space is in line with India's goal of taking a significant role in the worldwide chip supply chain. With the creation of 20,000 high-tech employees and the indirect creation of another 60,000 jobs, the company's semiconductor facility is projected to support the expansion and development of India's semiconductor industry.

With Zoho's arrival, the global supply chain will become more diversified and less dependent on a small number of powerful competitors.

Initial proposals call for setting up a semiconductor design project in the Tenkasi district of Tamil Nadu, where the proposed factory will be located. With the help of Tenkasi-based semiconductor expert and former Intel employee Ananthan Ayyasamy, this project seeks to establish sophisticated chip design competence in the area.

The IT ministry is reviewing the company's proposal at the moment and has asked Zoho to provide more information about the clients it plans to work with. In the fiscal year 2022–2023 (FY23), Zoho's operating revenue soared 30% year over year to INR 8,703.6 Cr ($1 Bn), while net profit increased 3% to $340 Million.

A mega semiconductor fabrication facility in Dholera, Gujarat, in collaboration with Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC), and an Outsourced Semiconductor Assembly and Test (OSAT) facility for semiconductor assembly and testing in Jagiroad, Morigaon, Assam, are among the semiconductor proposals that the Indian government has recently approved.

By 2029, the nation hopes to become a significant force in the world's semiconductor manufacturing market.