Zoho Halts $700M Semiconductor Plan

Summary

Sridhar Vembu of Zoho announced the suspension of their semiconductor fab plans due to technological uncertainties, highlighting the capital-intensive nature of this industry and the need for government support. This reflects broader challenges in India's semiconductor ambitions amid geopolitical tensions, necessitating sustained R&D investment, talent retention, and strategic partnerships for future success. When Zoho’s founder Sridhar Vembu tweeted today, that his company had “shelved” its much-discussed semiconductor-fab plan for lack of confidence in the underlying technology, it was a rare moment of stark realism from one of India’s most optimistic entrepreneurs. “This business is so capital-intensive it requires government backing,” he wrote. “We did not have that confidence in the tech, so our board decided to pause—until we find a better approach.” That pause may sting for a firm that has long thrived on bootstrapping and self-reliance. Zoho was in talks with the Department of Electronics & IT under India’s Semiconductor Mission, and reports reveal that they had set aside some $200 million for a pilot 28 nm wafer line in Tamil Nadu. Yet as the company dug into the requirements—extreme-UV lithography, sub-10 nm process nodes, global supply-chain partnerships—it realized that building a modern fab is an order of magnitude more complex than spinning up a new data center. Zoho’s decision to halt $700 million semiconductor plan echoes a broader pattern in India’s semiconductor push. When Prime Minister Modi unveiled the Chips to Startup program in 2022, he dangled $10 billion in incentives to lure global giants. Vedanta-Foxconn broke ground first, only to pause last year amid concerns over domestic demand. The marquee Adani-Tower Semiconductor deal—touted as India’s first $10 billion chip plant—also unraveled in April 2025, with Adani citing financial and market uncertainties. Taken together, these retreats underscore one harsh truth: fabs need deep pockets, deca...