Zoho Corporation has dropped its $700M semiconductor manufacturing plans in India just a day after the Adani Group pulled the plug on its $10B semiconductor venture.
India’s intentions to establish a global semiconductor manufacturing industry have encountered significant setbacks, as two major projects have been paused within days of each other.
Zoho pauses its $700M project
Zoho Corporation, a prominent Indian software company, has put its plans to invest $700M into manufacturing semiconductors in India on hold.
The $700M initiative included plans to invest $400M into establishing a facility in Karnataka, South India. The factory was expected to create 460 jobs and would have been the first project of its kind in the state.
Zoho formed a board to oversee the project and made initial hires under Silectric Semiconductor Manufacturing, but the company struggled to find a suitable technology partner to oversee the complex chip-making process.
Zoho’s co-founder, Sridhar Vembu, confirmed the suspension of the project in a social media post. He stated that the company had a lack of confidence in the technology path and the capital-intensive nature of the business, as it would require government backing.
In Vembu’s social media post, he said, “We did not have that confidence in the tech.” The executive also emphasized the need for complete confidence in their methods before utilizing taxpayer money.
“Since this business is so capital intensive it requires government backing, we wanted to be absolutely sure of the technology path before we take taxpayer money,” he stated.
India’s semiconductor industry takes consecutive knocks
Prior to Zoho Corporation pausing its project, the Adani Group paused its $10B semiconductor project in collaboration with Israel’s Tower Semiconductor.
The Maharashtra state approved the project aimed at producing 80,000 semiconductor wafers monthly and creating 5,000 jobs. However, after some internal evaluations within the company, it came to light that there were uncertainties about the local demand for semiconductors and concerns over Israel’s Tower’s limited financial commitment.
The Adani Group had expected a more substantial investment from its partner, and after being disappointed, the group decided to halt discussions. It is possible that talks may resume in the future.
Both Zoho and the Adani Group pulling out of their projects is a significant setback to Prime Minister Narendra Modi’s efforts to position India as a pillar of the global chip manufacturing industry.
India currently lacks an operational semiconductor facility, and previous attempts to develop such a facility, like the $19.5B Vedanta-Foxconn joint venture, have all failed.
Semiconductor projects by companies like Tata and Micron are still underway, but the recent setbacks experienced by the already struggling semiconductor industry in India highlight the challenges of building a domestic chipmaking industry.
UBS estimates that India accounts for only 6.5% of global semiconductor demand, compared to 54% from the U.S. and China.
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