Zoho Halts $700 Million Chip Project Over Tech Doubts; Seeks Better Path

Zoho Corporation has shelved its $700 million semiconductor chip manufacturing project, citing lack of confidence in the current technology.

Co-founder Sridhar Vembu announced the decision on Thursday, stating that the company is pausing the plan ‘until we find a better tech approach’.

Vembu explained that chip fabrication is a capital-heavy venture requiring strong government support.

Taking to X, he posted, “On our semiconductor fab investment plan, 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.”

“We did not have that confidence in the tech so our board decided to shelve this idea for the time being, until we find a better tech approach,” the post added.

In June last year, Zoho applied for incentives under the Centre’s Rs 76,000 crore India Semiconductor Mission (ISM). The company had created a new unit, Silectric Semiconductor Manufacturing, to lead the project and had also proposed a chip design unit in Tenkasi, Tamil Nadu.

Zoho’s Strategic Shift

Vembu, who moved to Tenkasi in 2019 and stepped down as CEO in January 2025 to become chief scientist, emphasised Zoho’s responsibility in using public funds wisely.

Founded in 1996 as AdventNet and rebranded as Zoho Corporation in 2009, the firm offers SaaS-based business solutions globally.

Despite stepping back from chip manufacturing, Zoho remains committed to innovation, with Vembu signalling a continued focus on technological research and development.

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