Zoho plans to foray into chipmaking, seeks Govt. incentives

Indian software firm Zoho is planning its entry into chipmaking space, while seeking incentives from the federal government. Zoho that competes with the likes of Microsoft and Salesforce is pegging the investment plan to be around $700 million. The company is proposing to manufacture compound semiconductors, which have specialized commercial applications and are made from alternatives to the more-commonly used silicon in chipmaking.

Zoho, established in 1996 and now headquartered in India's Tamil Nadu, offers software and related services on subscription to businesses in 150 countries. It is the latest company to seek financial incentives from the government to set up a chip fabrication plant.

Semiconductors are a key to 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. The Zoho proposal is being reviewed by the panel that drives India's chip initiatives at the IT ministry.

The ministry has sought more clarity from Zoho on the customers it intends to do business with. According to a source, Zoho had also identified a tech partner to help set up the operation from scratch, without naming the firm.

In February, India gave the go-ahead for the construction of three semiconductor plants worth over $15 billion by firms including Tata Group and CG Power, with plans to manufacture and package chips for sectors including defence, automobiles and telecommunication.