Zoho joins India Inc in semiconductor diversification: Here's why

Indian businesses are exploring opportunities beyond their core expertise and venturing into the intricate semiconductor industry. Previously, conglomerates such as Tata Group, known for its ventures from salt to steel, as well as power generation, transmission, and distribution giant CG Power, real estate player Hiranandani Group, engineering and manufacturing powerhouse L&T, and the HCL Group, are making notable forays. The latest entrant is Chennai-based Zoho, known for its core competency in software as a service, which has applied for a compound semiconductor fab with a strategic technology partner.

“It is very positive that large successful technology enterprises are beginning to invest in electronics and semiconductors. Zoho has been looking at this sector positively for some time. They have already invested in compute servers and chip design companies,” says Satya Gupta, President of VLSI Society. Zoho’s recent proposal to build a Silicon Carbide (Compound Semiconductor) Fab is a very welcome move. “Both Silicon carbide and GaN for power electronics is going to be very important for India to serve areas like electric vehicles, alternate energy, railways, power distribution, green hydrogen and many other domains where domestic companies are growing significantly.”

Unlike traditional silicon fabs, silicon carbide fabs require relatively lower investment, technology is simpler and the impact for India could be very high. Other than Zoho,

there are a few other proposals for Silicon carbide fabs from SICSem and Silicon power, and even CG-Power and Kaynes are exploring compound semiconductor fabs.

But why semiconductors?

Putting things into perspective, Devroop Dhar, Co-founder & Managing Director at Primus Partner explains, “With the growing demand from various industries such as computers and electronics, telecommunications, automobiles and transportation, energy, and healthcare, India must reduce its import bill and aim for self-sufficiency in the semiconductor sector. This situation presents a significant opportunity for Indian companies, which Zoho is aptly addressing.” He adds, “for this project, Zoho will need a technology partner and, according to media reports, plans to collaborate with UK-based Clas-SiC Wafer Fab. The proposed investment in Tamil Nadu will further diversify the geographical investment in the semiconductor sector, complementing other projects in states like Gujarat and Assam. This geographical diversification will also help attract the right talent to the industry, benefiting everyone involved.”

Experts say that Indian companies have come to realise that software services can take them only thus far. So there is a need to diversify and semiconductors have definitely emerged as one of the key areas that they can diversify into. Independent semiconductor analyst Arun Mampazhy explains there are a bunch of indirect factors driving such decisions. “There is a good enough talent in the semiconductor field in India, mostly the design side. Even on the fab side, the manufacturing of the fabs now have a lot of Indian workforce. I think a lot of feedback coming from them. They believe that this is an industry that India should have and you should look, advices that many of the Indian industries are receiving from the expat Indians, this could also be a factor which is pushing them more slowly.”

Another reason Danish Faruqui, CEO of Fab Economics cites is the subsidies by central and state governments, and the unparalleled pave of regulatory approvals for semiconductor sites leading to unprecedented ease of business for semiconductor manufacturing segment is another reason for companies to look into this industry.

The potential of the semiconductor industry is vast, with global projections indicating nearly a doubling to reach $1 trillion by 2030, a substantial increase from the current $600 billion.