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Zoho Ventures into Semiconductor Manufacturing with $700 Million Investment in India

Zoho Pledges Employee Loyalty Amid Global Layoffs, Invests in AI and Rural Jobs

8 June 2024

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Neelesh Bachani

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1.  Zoho, partnering with another entity, plans to invest $700 million in establishing a semiconductor manufacturing facility in India, aiming to bolster the country's role in the global supply chain and benefit from government incentives.


2. Co-founder Sridhar Vembu criticizes widespread layoffs by tech giants, emphasizing Zoho's commitment to employee loyalty by not laying off staff during the pandemic and highlighting the long-term value of dedicated employees.


3. Zoho is setting up a manufacturing facility in Tamil Nadu to produce handheld tools, creating jobs for local youth and promoting sustainable economic development in rural areas.

Zoho has taken a significant step toward establishing a semiconductor manufacturing facility in India, as confirmed by co-founder Sridhar Vembu. This move aligns with India’s ambitions to become a crucial global semiconductor supply chain player. Vembu revealed that Zoho has partnered with another entity and is awaiting government approval, acknowledging the stringent evaluation process involved. Although Vembu did not disclose specific details, it is known that Zoho plans to invest $700 million in this venture. This initiative places Zoho among several companies seeking government incentives to enter the semiconductor market. India already has four approved semiconductor and assembly plants, predominantly in chip packaging and assembly.

 

India's first major push to build a semiconductor manufacturing ecosystem from scratch came in December 2021 with the approval of a Rs 76,000 crore incentive plan. Initially, the plan had a tiered incentive structure for different types of semiconductor manufacturing applicants, but it was later simplified to offer a flat 50% central subsidy for successful applications. The Tata Group-PSMC Group joint venture is currently the only entity setting up a chip manufacturing unit in India. Zoho's entry into this field underscores the increasing interest and investment in India's semiconductor industry, highlighting the country's potential as a future hub for semiconductor manufacturing.

 

Vembu criticized the widespread layoffs by global tech companies, labeling such actions as short-sighted and detrimental to employee morale and loyalty. He emphasized that these layoffs, often done to maintain sharp profit numbers despite only a short-term downturn, are not a practice Zoho supports or wants to see developed in India. Over the past months, major tech firms like Google, Microsoft, Meta, Amazon, and Tesla have laid off thousands of employees following a hiring surge during the pandemic. Vembu argued that these layoffs, particularly when done for marginal profit concerns, damage long-term employee loyalty and morale.

 

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Contrasting with many global tech companies, Zoho did not lay off any employees during the pandemic. With over 15,000 employees globally, Zoho continues to compete primarily with Microsoft, offering over 55 apps catering to various business needs. At its annual event, Zoholics, Zoho announced updates to its product suite, emphasizing its commitment to innovation and employee retention. Vembu reiterated that loyal employees are the most valuable assets for any company and that demonstrating loyalty to employees is crucial for maintaining a motivated and dedicated workforce.

 

On the technological front, Vembu commented on the tech industry's rapid adoption of artificial intelligence (AI). He noted that the rush to integrate AI features to avoid falling behind competitors is limiting thoughtful adoption and development. Zoho, while also integrating AI into its apps to enhance productivity and streamline processes, advocates for a more measured approach to AI implementation. This perspective reflects Zoho's broader strategy of sustainable growth and thoughtful innovation, contrasting with the frenetic pace seen in some segments of the tech industry.

 

Beyond its ventures in technology and semiconductors, Zoho is also investing in rural employment by establishing a manufacturing facility in Tamil Nadu to produce handheld tools. This initiative aims to create jobs for local youth, offering training and good wages to reduce migration to urban areas. Vembu highlighted the importance of such efforts in promoting sustainable economic development in rural regions, reflecting Zoho's commitment to social responsibility and community development. The factory, set to commence operations soon, will help meet domestic demand for tools used by various trades, thereby contributing to local manufacturing and employment.

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