Lenovo starts producing AI servers in India

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

The production line at the company’s Puducherry plant, which has been operational since 2005, will produce enterprise AI and GPU servers for AI workloads and cater to local and international markets, the company said at the launch of its Infrastructure R&D Lab on Tuesday. While the servers will be used internally, about 60% of the production capacity will be exported to the Asia-Pacific region, the company said.

In the next few years, AI servers will become hot-selling products

The move will make Lenovo one of the first companies to produce AI servers under the Indian government’s incentive program, making India a global destination for high-end IT hardware manufacturing in addition to China, Taiwan, etc. AI servers will become a product in high demand in the coming years as consumers and businesses increasingly use generative AI, which requires data or more powerful computing power provided by AI servers.

India’s second-largest PC maker’s bid to produce servers in India comes after it announced a three-year, $1 billion AI investment plan last year to develop AI platforms, computing devices and servers.

In February this year, Mint had reported that Lenovo was planning to manufacture servers in India, hoping to take advantage of the Indian government’s production-linked incentive (PLI) scheme for information technology (IT) hardware. Lenovo was one of the first companies to benefit from the PLI scheme, which provides financial incentives to companies that manufacture in India.

“(For PLI) 1.0, like I said, we were one of the first beneficiaries with our original design manufacturer (ODM) partners Dixon and Motorola and we reaped all the benefits of PLI 1,” said Shailendra Katyal, managing director, Lenovo India. “For PLI 2.0, we have made these announcements and technology transfer and capacity building is ongoing. We expect the launch to be around January-March next year, but Dixon is actively moving forward with technology transfer.”

Lenovo acquired US consumer electronics maker Motorola in 2014. Noida-based Dixon Technologies manufactures Motorola smartphones locally. Lenovo announced in December last year that Dixon’s subsidiary Padget Electronics will manufacture its laptops and notebooks.

Lenovo said that while it has been manufacturing products in India for 20 years, it is now focusing on localizing component production in the country. At least 40% of its mobile phone components are made in India, and the company is looking to increase the localization of its products in the country.

“India’s economy is going to grow five, six times from where it is today, all because of technology, and we are totally committed to it,” Katiyar said.

Lenovo’s increased focus on research and development and engineering is partly driven by the demand for artificial intelligence.

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

“Now, when you look at the whole of AI, it also involves solutions and services,” said Sumil Bhatia, president of Lenovo’s Infrastructure Solutions Group (ISG) in Asia Pacific. “We have complete end-to-end solutions, whether it’s AI, vertical industries or digital workplace, but it’s still at the stage where we recommend that customers be able to deploy services and have complete end-to-end management and support.”

Bhatia added that the company has more than 400 AI professionals on staff globally and investments in this area are ongoing.

Lenovo has also set up an Infrastructure R&D Lab in Bengaluru, one of four labs in the world dedicated to infrastructure solutions. The company is increasing its focus on R&D, with global R&D spending increasing to $2.3 billion in fiscal 2024.

Lenovo Group derives 53% of its business from personal computers (PCs), with the Americas market contributing just over a third of its revenue.