‘We Did Not Have That Confidence,’ Says Zoho’s Sridhar Vembu On Suspending $700 Million Semiconductor Plan

Zoho has halted its semiconductor chip manufacturing plans after a year-long effort. It had planned to invest about $700 million in chip manufacturing. Reuters reported that the company was unable to find the right technology partner to provide guidance on the complex processes involved in making chips.

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Zoho CEO admits lacking "confidence in the tech"

Sridhar Vembu, Zoho’s founder, said that they did not have “confidence in the tech”, so they shelved the idea of doing a semiconductor business.

Vembu said in a post on the social media platform X that the semiconductor manufacturing business is very capital-intensive and requires government backing.

He added they wanted to be certain of their technology capabilities before taking taxpayers’ 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”, Vembu shared in the post.

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…

— Sridhar Vembu (@svembu) May 1, 2025

Zoho's plans

Zoho announced entering semiconductor manufacturing in April last year. As reported by Reuters, Vembu’s company had established a separate division for the same purpose, hired people, and formed a board. 

As part of its diversification strategy, the tech firm intended to invest $400 million in a semiconductor manufacturing facility located in Karnataka. This project was expected to create huge job openings in the Mysuru region.

Zoho's subsidiary, Silectric Semiconductor Manufacturing, started making a small number of hires and formed a board last year to oversee its chipmaking efforts.

Zoho is valued at around $12 billion and offers affordable alternatives to cloud-based software from companies like Microsoft.

It provides software and related subscription services to businesses in 150 countries. The tech startup has over 18,000 employees and more than 120 million users worldwide.

Incidentally, the Adani Group has also paused discussions with Israeli firm Tower Semiconductor about a $10 billion chip project after conducting an internal review.

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