$200 mn Investment: Zoho Applies for License to Build SiC Chip Fab in India

"We have applied for the licence and are awaiting government clearance. We will make a formal announcement once we get the approvals," Vembu stated at the company’s annual event in Texas, US.

Introduction:

Chennai-based Zoho Corp. has taken a significant step towards advancing semiconductor Chip manufacturing capabilities for india by applying for a licence to establish a compound semiconductor fabrication plant, commonly known as a fab. The company has earmarked a substantial $200 million for this ambitious project. However, according to industry insiders, the total net investment could potentially reach $600 million, drawing significant attention and involvement from a technology partner.

Semiconductors are a key plank of India’s business agenda, with a $10 billion package in place to boost the industry as it hopes to compete with countries such as Taiwan in a few years

Background of Zoho chip Dreams for India:

India’s semiconductor ambitions got a big boost with the government approving incentives worth Rs 76,000 crore. These incentives are aiming at attracting semiconductor companies and building a strong manufacturing ecosystem. India, with its thriving tech industry, aims to become a global hub for semiconductor production.

Zoho, the Chennai-based company, a provider of software as a service that rivals US giant Microsoft, is the latest to seek government incentives to enter the lucrative semiconductor market.

Government Support and Strategic Location

Zoho Corp. is optimistic about receiving government support for this project under the compound semiconductor manufacturing scheme. Sridhar Vembu, cofounder and CEO of Zoho Corp., expressed confidence in the government’s backing. “We have applied for the licence and are awaiting government clearance. We will make a formal announcement once we get the approvals,” Vembu stated at the company’s annual event in Texas, US.

The project aims to establish Silicon carbide (SiC) chip manufacturing in Tamil Nadu, a strategic location that aligns with India’s broader goal to develop a robust semiconductor and display manufacturing ecosystem. The government’s scheme, which was updated in June 2023, offers fiscal support covering 50% of capital expenditure for projects meeting certain criteria.

India now has four approved semiconductor chip manufacturing and assembly plants. Among these, three are dedicated to chip packaging and assembly, while the sole chip manufacturing unit is being established by a Tata Group and PSMC Group joint venture.

“We have applied with a partner, but the approval is yet to come. There is a stringent evaluation process,” ~Sridhar Vembu, CEO, Zoho

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Collaboration with Clas-SiC

A key aspect of Zoho’s plan is its collaboration with Clas-SiC, a Scotland-based company specializing in Silicon carbide technology. This partnership will enable Zoho to license the technology needed to produce SiC chips. These chips are crucial for various industrial applications, including electric vehicles (EVs). This aligns with Zoho’s broader interest in advanced chemistry cells, the core component of batteries used in electronics and EVs.

Zoho’s venture into semiconductor manufacturing showcases its dedication to economic growth and indigenous innovation.

The establishment of manufacturing facilities reinforces India’s semiconductor ecosystem and supports the government’s vision of inclusive growth.

This move reflects Zoho’s proactive approach to contributing to industrial development and fostering innovation within the country.

Through its investment, Zoho aims to catalyze technological advancements and propel India towards self-sufficiency in semiconductor production.

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Zoho Strategic Vision for India Chip

Zoho’s semiconductor fab project is part of a larger strategy to build deep technological and manufacturing capabilities within India. The company has been actively exploring advanced cell chemistry. Sridhar Vembu previously indicated plans to invest in this area. “We need good people with experience in cell R&D, and we’re talking to some right now,” Vembu noted, emphasizing the need for expertise in this field.

The Competitive Landscape

Zoho’s application makes it the third company to seek a licence under the government’s semiconductor initiative. It follows SiCSem, a subsidiary of Archean Chemical Industries, and RIR Power Electronics, affiliated with the US-based Silicon Power Group. This growing interest reflects the strategic importance of developing semiconductor manufacturing capabilities within India.

Zoho’s Expansion Amid Slower Growth

The announcement of the semiconductor fab coincides with Zoho revamping its primary revenue source, Zoho CRM. The company has introduced AI-powered analytics and support for open-source AI models. This aims to enhance its competitiveness in the global CRM market, valued at $89 billion in FY24. Despite a slower growth rate in its key US market, Zoho is determined to innovate and expand its offerings.

AI Integration and Data Security

While Zoho has been cautious in adopting widespread AI integration, it is focused on contextually embedding AI tools within its CRM suite. This approach allows enterprise clients to integrate open-source AI models and build generative AI solutions tailored to their needs. Data security remains a priority, with Zoho developing AI security models to ensure complete data privacy.

Additional Context and Industry Impact

Zoho’s move into semiconductor manufacturing is timely due to the global semiconductor shortage and rising demand for advanced chips in sectors like automotive, telecommunications, and consumer electronics. Establishing a semiconductor fab in Tamil Nadu could make India a competitive player in the global supply chain.

This initiative aligns with the Indian government’s vision to reduce dependency on imported semiconductors and promote domestic manufacturing.

Future Prospects

The success of Zoho’s semiconductor fab project could inspire other tech companies in India to explore similar ventures, thereby strengthening the country’s technological infrastructure. Additionally, the project’s focus on Silicon carbide technology positions it at the forefront of innovation, catering to the growing needs of the electric vehicle industry and other high-tech applications.

Editorial Team
Editorial Team
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