Sridhar Vembu-led SaaS unicorn Zoho is reportedly planning to enter the semiconductor sector, marking a significant diversification from its traditional software business. The company has applied to the Indian government for approval to receive incentives under the Production Linked Incentive (PLI) scheme for establishing a chip fabrication plant.
Zoho is projecting an investment of approximately $700 million to set up this semiconductor manufacturing unit, according to sources cited by Reuters. The company aims to produce compound semiconductors, which are used for specialized commercial applications and are made from materials other than the commonly used silicon in traditional chipmaking.
“The proposal is under review by the IT ministry, which has requested further details from Zoho regarding its intended customer base,” the report quoted a source as saying. Additionally, Zoho has already identified a technology partner to assist in establishing the chip fabrication plant.
This move follows an announcement by Sridhar Vembu nearly two months ago on social media platform X, where he mentioned Zoho’s plans to embark on a semiconductor design project in the Tenkasi district of Tamil Nadu. This project is seen as part of Zoho’s broader strategy to diversify its technological capabilities and tap into the burgeoning semiconductor market.
The semiconductor industry is critical for various technological advancements and is currently experiencing a global supply shortage, making it a strategic area for investment. Zoho’s entry into this space could position it as a significant player in the industry, particularly in the realm of compound semiconductors.
Zoho’s application for PLI incentives aligns with the Indian government’s initiative to boost domestic semiconductor manufacturing and reduce dependency on imports. The PLI scheme offers financial incentives to companies investing in semiconductor manufacturing in India, aiming to establish a robust semiconductor ecosystem in the country.
As the review process by the IT ministry continues, industry observers are keenly watching Zoho’s progress in this new venture, which could potentially reshape the company’s business landscape and contribute to India’s ambitions of becoming a global semiconductor manufacturing hub.