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Zoho Corp has suspended its ambitious $700 million semiconductor fab plan after a year-long pursuit, with co-founder Sridhar Vembu citing lack of confidence in the technology as the primary reason.

“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,” Vembu wrote on X (formerly Twitter).

“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.”

The move deals a fresh blow to India’s semiconductor ambitions, which aim to boost local chipmaking capabilities through large-scale private and government investments.

A source familiar with the matter told Reuters that Zoho had struggled to find a suitable technology partner to navigate the complexities of chip manufacturing.

The development comes just as the Adani Group has reportedly paused its $10 billion chip project with Israel’s Tower Semiconductor following an internal review.

Zoho, established in 1996 and now headquartered in Tamil Nadu, offers software and related services on subscription to businesses in 150 countries, competing with the likes of Microsoft and Salesforce.

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