According to two people with firsthand knowledge of the idea, Indian software company Zoho is preparing to enter the semiconductor business and is looking for incentives from the federal government. One of these individuals estimated that the investment plan would cost $700 million.

Founded in 1996 and based in Tamil Nadu, India, Zoho competes with companies like Microsoft and Salesforce by providing software and related services to businesses in 150 countries through subscription.

It is the most recent business to apply to the government for financial incentives in order to establish a chip manufacturing facility. A $10 billion program to support the semiconductor sector is in place as part of India's business agenda, which aims to compete with nations like Taiwan in the near future.

According to the two sources, Zoho is planning to produce compound semiconductors, which are created from substitutes for silicon, which is more widely used in chipmaking and have specific commercial uses.

They also said that the suggestion is being examined by the committee at the IT ministry that oversees India's chip projects. According to the second source, the government has asked Zoho for further clarification about the clients it plans to work with. 

The IT ministry did not answer a request right away, and Zoho declined to comment.

Without naming the company, the initial source said that Zoho had also found a tech partner to assist in starting the business from scratch, with an estimated $700 million investment expenditure.

Without giving any further information, Zoho's founder and CEO, Sridhar Vembu, said in March that the company was contemplating a chip design project in the southern state of Tamil Nadu. It has not previously disclosed its intentions to diversify into the chip manufacturing industry.

According to media sources, Zoho generated over $1 billion in sales in the fiscal year that concluded in March 2023.

India approved the building of three semiconductor factories worth over $15 billion in February. The plants will be built by companies like Tata Group and CG Power, and its goal is to produce and package chips for use in the defense, automotive, and telecommunications industries.  By 2026, the Indian semiconductor industry is projected to be valued at $63 billion.