Zoho and Adani Halt Semiconductor Project Worth Rs 3.5k Crore
BENGALURU: The ambitious semiconductor projects of Adani Group and Zoho Corp are reportedly facing significant setbacks, raising concerns about India’s aspirations to establish a self-sufficient chip manufacturing ecosystem. While Zoho’s founder, Sridhar Vembu, confirmed the shelving of their semiconductor plans, reports suggest that Adani Group is also reconsidering its collaboration with Israelโs Tower Semiconductor for a proposed $10 billion fabrication plant in Maharashtra.
Zoho’s Semiconductor Plans on Hold
Zoho Corp’s semiconductor venture, Silectric, had aimed to set up a fabrication unit in Mysuru, Karnataka, with an investment of Rs 3,426 crore. The Karnataka government had approved this project just four months ago, anticipating the creation of around 460 jobs in the region. However, Vembu announced on social media platform X that the company decided to pause its semiconductor fab investment due to the capital-intensive nature of the business. He emphasized the need for government backing and a clear technological path before proceeding with taxpayer money. The decision to halt the project stemmed from difficulties in securing a suitable overseas technology partner, particularly in the complex field of power electronics semiconductors used in vehicles, which has limited established manufacturers globally.
Karnataka’s IT and BT minister, Priyank Kharge, stated that the government had not yet received formal communication from Zoho regarding the project’s cancellation. He reiterated the state’s commitment to collaborating with private players and expressed confidence in Karnataka’s electronics system design and manufacturing policies. Officials acknowledged that this decision represents a setback for the state’s semiconductor roadmap.
Adani Group’s Concerns Over Semiconductor Project
The Adani Group’s semiconductor initiative is also in jeopardy, with sources indicating that the company is worried about weak domestic demand for chips. Reports suggest that Adani’s collaboration with Tower Semiconductor has faced challenges, particularly regarding the limited financial commitment from the Israeli company, which was expected to provide technological expertise for the proposed $10 billion fab in Maharashtra. This development comes on the heels of the collapse of the Vedanta-Foxconn joint venture earlier this year, which aimed to establish a semiconductor plant in India.
India currently lacks an operational chip-making facility, although ongoing projects include Tata Group’s $11 billion fabrication and packaging units and Micron’s $2.7 billion chip packaging facility in Gujarat. The setbacks faced by both Adani and Zoho highlight the challenges in building a robust semiconductor ecosystem in the country.
Impact on India’s Semiconductor Ambitions
The withdrawal of these two major players from their semiconductor projects raises questions about India’s broader ambitions in the chip manufacturing sector. The Indian government has been actively promoting initiatives to establish a self-reliant semiconductor ecosystem, recognizing the strategic importance of chip manufacturing in the global economy. However, the challenges faced by both Adani and Zoho underscore the complexities involved in this endeavor.
Industry experts point out that the semiconductor sector is highly capital-intensive and requires significant technological expertise. The inability to secure reliable technology partners and the fluctuating demand for chips have posed significant hurdles for companies looking to invest in this space. As India strives to enhance its position in the global semiconductor market, the setbacks experienced by these companies may necessitate a reevaluation of strategies and partnerships.
The future of India’s semiconductor ambitions remains uncertain as stakeholders assess the implications of these recent developments. The government and industry players will need to work collaboratively to address the challenges and create a conducive environment for semiconductor manufacturing in the country.
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