Lenovo starts making AI servers in India

Lenovo Group has started manufacturing artificial intelligence (AI) servers in India with an annual capacity to produce 50,000 enterprise AI rack servers and 2,400 graphics processing units (GPU) to meet growing AI demand.

The company’s production line at its Puducherry facility, operational since 2005, will produce enterprise AI and GPU servers for AI workloads, and cater to demand from local and international markets, the company said at the launch of its infrastructure research and development (R&D) lab on Tuesday. While these servers would be used internally, about 60% of the production capacity is meant for exports across Asia-Pacific, it said.

AI servers to be high-demand products in coming years

The move will make Lenovo one of the first companies to make AI servers in the country under the government’s incentive scheme, putting India on the global map as an alternative manufacturing destination to China, Taiwan and others for high-end IT hardware. AI servers will be high-demand products in the coming years as consumers and enterprises use more and more generative AI, which requires a far larger computing power which is provided by data or AI servers.

India’s second largest PC maker’s bid to manufacture servers in India comes on the back of a three-year $1-billion investment in AI announced last year to develop AI platforms, computing devices and servers.

Mint had reported in February this year that Lenovo plans to make servers in India as it looked to capitalise on the Indian government’s production linked incentive (PLI) scheme for information technology (IT) hardware. The Chinese company was one of the first to benefit from the PLI scheme, which offers financial incentives to companies for manufacturing in India.

“(For PLI) 1.0, like I was saying, we were one of the first beneficiaries to our original design manufacturer (ODM) partner, which is Dixon and Motorola and we reaped all the benefits that have been there on PLI 1,” said Shailendra Katyal, managing director of Lenovo India. “On PLI 2.0, we made those announcements and the technology transfer and the capability build is happening as we speak. We would expect the launch to happen sometime around Jan-March period of next year, but there is active build that is happening on the tech transfer with Dixon.”

Lenovo acquired Motorola, an American consumer electronics manufacturer, in 2014. Noida-based Dixon Technologies makes Motorola smartphones locally. Lenovo announced in December last year that Dixon’s subsidiary Padget Electronics will manufacture its laptops and notebooks.

While it had been manufacturing products in India for two decades, Lenovo said it is focusing on the localization of component production in the country. At least 40% of the components used in phones are manufactured in India and it is looking to increase product localization in the country.

“When India grows now, 5x, 6x on the current base, it will all be with the power of technology, and we are fully committed to it,” said Katyal.

Lenovo’s push to increase its focus on R&D and engineering is, in part, spurred by an AI demand.

“As we enter the AI decade, these investments are critical to delivering best-in-class AI infrastructure and large language model solutions that meet the evolving needs of our customers,” said Amit Luthra, managing director, Lenovo ISG India.

“Now, when you look at this entire AI, it’s also about solutions and services we have that complete, end to end solutions, whether it’s AI, verticals, digital workplace, but it’s very at this stage, advising customers being able to deploy the services and manage and support them, complete, end to end,” said Sumir Bhatia, president of Infrastructure Solutions Group (ISG) for Lenovo Asia Pacific.

Bhatia added that the company had over 400 AI-specialized staff globally and investment on that front is ongoing.

Lenovo also launched its infrastructure research and development (R&D) lab in Bengaluru and is one of the four in the world dedicated to infrastructure solutions. The company is increasing its focus on research and development, as it has increased its global R&D spend to $2.3 billion for FY24.

As much as 53% of Lenovo’s business comes from personal computers (PCs) with the Americas contributing a little more than a third of its revenue.