Zoho Halts Semiconductor Fab Plans in Mysuru, Cites Strategic Reassessment

Mysuru/Bengaluru, May 8: In a surprising turn, Zoho Corporation, one of India's leading SaaS companies, announced today that it is pausing its plans to invest in a semiconductor fabrication (fab) plant in Mysuru. The move comes just months after the company expressed keen interest in entering India’s burgeoning semiconductor sector.

Zoho CEO Sridhar Vembu confirmed the development on social media, stating that the decision follows an internal strategic reassessment. “We have decided to halt our semiconductor fab plans for now,” Vembu said. “It’s a long-term bet that requires extensive capital and government support. We want to reassess and come back stronger.”

The proposed fab was expected to be a major milestone for Karnataka's growing tech ecosystem, with Mysuru poised to become a potential hub for electronics manufacturing. Sources close to the development told Bangalore Beat that the initial investment was estimated to be over ₹3,000 crore, with significant employment generation projected.

Karnataka’s IT Minister, Priyank Kharge, responded to the announcement saying, “While we respect Zoho’s decision, the state remains committed to fostering semiconductor manufacturing. We have a strong pipeline of companies showing interest in setting up fabs in Karnataka, including in Mysuru and near Bengaluru.”

Industry analysts say the move reflects the high entry barriers in semiconductor manufacturing, including policy complexity, global supply chain dependencies, and capital intensity. “This is a long game,” said tech analyst Nikhil Joshi. “Zoho pulling back doesn’t mean the idea is off the table, it may return once the policy and investment climate becomes more favourable.”

The halt comes amidst India’s push to become a global chip manufacturing hub under the India Semiconductor Mission, with large players like Micron and Tata Group making inroads.

As Zoho recalibrates, attention now turns to whether other Indian tech majors will fill the gap and if Mysuru can still realize its semiconductor ambitions.