In a major investment loss for Karnataka, Zoho chief scientist Sridhar Vembu announced on Thursday that the company is shelving its semiconductor fab investment plan, “since this business is so capital intensive, it requires government backing”.Zoho wanted to be sure of the technology path before taking taxpayer money, Vembu said. The company did not have the confidence in the technology, so its board decided to shelve this idea for the time being, until it finds a better technical approach, he said.

The Karnataka government in December last year had announced that the State’s first semiconductor project would come up at the Kochanahalli Electronics Manufacturing Cluster near Mysuru. Karnataka chief minister Siddaramaiah hails from the district and represents it in the Assembly. Zoho had sought 40 acres of land at the EMC cluster at Kochanahalli, Mysuru.

Tamil Nadu-based Silectric Semiconductor, promoted by Zoho Corporation‘s co-founder Radha Vembu, had aimed to set up its manufacturing unit with an investment of Rs 3,426 crore. The unit had aimed to add about 460 jobs. Silectric is fully owned by Zoho Corporation. Silectric’s is among the nine projects the state high-level clearance committee (SHLCC), chaired by Siddaramaiah, had approved in December.

Silectric had proposed to work on silicon carbide-based fabrication and semiconductor assembly, test, marking and packaging (ATMP). The initial plan was to set up the operation in the manufacturing of silicon carbide, manufacture ingots, package modules/single packages including the manufacturing of MOSFETS. The target product manufacturing aimed to incorporate an ATMP facility to complete the end-to-end production process, according to the company’s proposal to the government.

The proposed venture, according to the proposal, was being founded by a team of experienced semiconductor professionals with the financial backing of Zoho, and support from the ministry of electronics and information technology.