Lenovo starts manufacturing 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 (GPUs) to meet the growing demand for AI.

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

AI servers will be high-demand products in the coming years

The move will make Lenovo one of the first companies to manufacture 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 in-demand commodities in the coming years as consumers and businesses increasingly use generative AI, which requires much higher computing power than data or AI servers provide.

The bid by India’s second-largest PC maker to make servers in the country follows a three-year, $1 billion investment in AI announced last year to develop AI platforms, computing devices and servers.

In February this year, Mint reported that Lenovo plans to manufacture servers in India as it looked to cash in 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 manufacturing in India.

“(In case of PLI) 1.0, as I said, we were one of the early beneficiaries of our original design manufacturer (ODM) partner, which is Dixon and Motorola, and we leveraged all the benefits that were there in PLI 1,” said Shailendra Katyal, managing director, Lenovo India. “In case of PLI 2.0, we made those announcements and the technology transfer and capability development is happening as we speak. We expect the launch to happen sometime between January and March next year, but there is active development going on in the technology transfer with Dixon.”

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

While Lenovo has been manufacturing products in India for two decades, it is aiming to localise component production in the country. At least 40% of the components used in phones are manufactured in India and the company is looking to increase product localisation in the country.

“When India grows now, five or six times its current level, it will all be thanks to the power of technology, and we are fully committed to that,” Katyal said.

Lenovo’s push to increase its focus on R&D and engineering is, in part, driven by a demand for artificial intelligence.

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

“Now when you look at all this AI, it’s also about solutions and services that we have that are complete, end-to-end solutions, be it AI, verticals, digital workplace, but at this stage, we’re advising customers so that they can 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-focused employees 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 raised its global R&D spending to $2.3 billion for fiscal year 2024.

Up to 53% of Lenovo’s business comes from personal computers (PCs), with the Americas contributing just over a third of its revenue.