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A Big Tech Dream Just Got Cancelled – And It Involved $700 Million

One of India’s most ambitious chip-making dreams just hit a dead end—and it came from an unlikely source.

Zoho Corporation, best known for its suite of business software and its unique village-based office model, has officially suspended its $700 million semiconductor fabrication project. The move has shocked many in India’s tech and manufacturing circles, especially since it represented one of the boldest steps into high-end chip manufacturing by a software company.

The company says it’s pressing pause due to concerns around technological challenges and the need to be cautious with government-supported, capital-heavy ventures.

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Zoho and Its Surprising Chipmaking Ambition

When you think of Zoho, you think of cloud software, CRMs, and running an Indian SaaS empire from rural offices—not building microchips.

But in early 2023, Zoho quietly launched a new subsidiary called Silectric Semiconductor Manufacturing and revealed plans to invest over $400 million in a chip fabrication facility in Karnataka—with a total project value of $700 million in the pipeline.

The idea? To dive headfirst into India’s growing semiconductor ecosystem, which the government has been pushing aggressively through its “Make in India” and electronics self-reliance programs.

Zoho’s fab project in Mysuru had even received in-principle clearance from the Karnataka government. It was expected to create over 460 skilled jobs and turn the city into a key player in India’s nascent chip economy.

Everything looked green-lit—until this sudden U-turn.

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So, Why Did Zoho Back Out?

According to the company, the decision wasn’t taken lightly. Zoho founder and CEO Sridhar Vembu is known for his long-term vision and cautious approach when handling large-scale bets.

Here’s what reportedly led to the suspension:

1. Concerns Around Core Technology

Chip manufacturing is notoriously complex. Unlike software, where Zoho thrives, building semiconductors involves ultra-high precision, cutting-edge materials, and world-class cleanroom infrastructure.

Zoho reportedly realized that the underlying technology and know-how for operating a fab at scale were not mature enough within the venture.

2. Heavy Capital Risks

A semiconductor fab is among the most capital-intensive investments a company can make. We’re talking billions of dollars in upfront costs, years before profitability, and extreme dependency on global supply chains.

Even with government support, Zoho felt the need to exercise caution before moving forward, especially in a space so far removed from its core business.

3. Timing and Market Readiness

India is just beginning its semiconductor journey. While the government is encouraging investment through subsidies, the ecosystem, vendor network, and trained workforce are still developing.

Zoho seems to have concluded that now may not be the right time to jump into chip manufacturing—at least not without more clarity and confidence in the market.

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What Does This Mean for Mysuru and the Chip Sector?

The Mysuru facility was expected to bring a wave of opportunity to the region. It would have not only created hundreds of jobs but also attracted component suppliers, tech talent, and allied services to Karnataka.

Now, with the project shelved, those plans are on hold indefinitely.

However, the broader momentum in India’s semiconductor space remains intact. Several other players, including international giants like Micron and Vedanta-Foxconn, are still pursuing their chip investments in the country.

But Zoho’s exit does serve as a sobering reminder: chipmaking is not for the faint-hearted, and even visionary companies like Zoho need to tread carefully.

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Zoho’s Legacy of Caution and Vision

Zoho has always walked a different path.

While most tech companies raise venture capital and aim for flashy IPOs, Zoho has remained bootstrapped and profitable. It has opened offices in small towns and villages, prioritized long-term product development over short-term wins, and focused deeply on India-first innovation.

The decision to step back from the chip race may seem like a setback—but in many ways, it’s consistent with the company’s DNA: move cautiously, focus on what you do best, and don’t chase trends blindly.

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What’s Next for Zoho?

Zoho hasn’t ruled out future involvement in India’s semiconductor journey. The company still owns Silectric Semiconductor, and there’s potential that it may revisit chip manufacturing down the line—possibly in a different capacity or with strategic partners.

For now, Zoho is likely to double down on its core SaaS business, where it continues to grow both in India and globally. With over 100 million users and a growing list of enterprise clients, Zoho’s main engine is running stronger than ever.

And if the company decides to get back into chips in a few years—it’ll probably be smarter, better prepared, and more aligned with the larger ecosystem.

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Final Thoughts

Zoho’s decision to pull back from its $700 million chip investment isn’t just about one company—it reflects the realities of building semiconductors in India today.

There’s optimism, yes. There’s government backing. But there’s also risk, complexity, and the need for patience.

Zoho saw those risks and chose to wait—and in the long run, that might be the smartest move of all.

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