'Before we take taxpayer money...' Sridhar Vembu's Zoho halts $700 million chip fab plans

Indian software firm Zoho has abandoned its plans to open its own semiconductor fab plant in India. "We did not have that confidence in the tech," said Zoho co-founder Sridhar Vembu in a post on X (formerly Twitter).

Zoho was planning for a $700 million plan to foray into chip manufacturing, and it reportedly also hired people and formed a board to oversee chipmaking efforts, however, the plan has now been suspended.

Vembu added, "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."

Earlier this week, Reuters had reported that Indian billionaire Gautam Adani's group has also paused discussions with Israel's Tower Semiconductor for its $10 billion chip project following an internal evaluation by the Indian group.

The Karnataka government had earlier said that it approved Zoho's planned $400 million facility in Mysuru region, which would have generated 460 jobs, and been the first such project in the state.

While Vembu noted that the idea is currently being shelved, there's no future timeline shared on when Zoho plans to resume its ambitions. Zoho, established in 1996, offers software and related services on subscription to businesses in 150 countries and has over 18,000 employees and more than 120 million users.