- Chinese group set up R&D laboratory in Bengaluru
China’s Lenovo Group has announced the establishment of a manufacturing plant for AI servers in Puducherry, India, complemented by a dedicated research and development (R&D) laboratory in Bengaluru.
The strategic decision positions Lenovo to meet the surging demand for AI and graphics processing unit (GPU) servers, driven by the generative AI revolution that gained momentum at the end of 2023.
Lenovo’s objectives are ambitious, with plans to produce 50,000 AI rack servers and 2,400 GPU servers annually.
These servers are specifically engineered to handle resource-intensive tasks such as machine learning, catering not only to the growing local market but also facilitating exports.
Amar Babu, president of Lenovo Asia Pacific, emphasised that this initiative aligns with two of India’s vital campaigns: “Made in India” and “AI for All.”
These programs serve to bolster domestic manufacturing capabilities and expand access to AI technology, reinforcing the Indian government’s commitment to innovation and technological advancement.
The announcement follows a trend among major global tech companies, including Apple, Foxconn, and Dell, which have been progressively increasing their manufacturing footprints in India.
Geopolitical dynamics
The shift is partially motivated by a desire to reduce reliance on China amidst evolving geopolitical dynamics.
Lenovo’s foray into AI server production resonates with the broader industry trend, as the demand for GPU and AI infrastructure has surged in response to the unprecedented growth in AI applications.
While Babu refrained from disclosing specifics regarding investment plans or hiring targets for the Puducherry plant and Bengaluru lab, the implications of this expansion are significant.
The AI hardware market is poised for rapid growth, with forecasts indicating that it could capture as much as 12 per cent of the global AI market, projected to reach approximately $380 billion by 2027, according to a report by Nasscom and BCG.
The anticipated market expansion underscores the strategic positioning of companies like Lenovo in an increasingly competitive landscape.
Moreover, Lenovo’s relationship with Dixon Technologies, a local partner engaged in the production of PCs and Motorola devices, illustrates the company’s integration into India’s manufacturing ecosystem, even as its AI-server manufacturing plans are not directly tied to government incentives.
The partnership not only supports Lenovo’s operational objectives but also highlights the incentives the Indian government has implemented to attract foreign investment in the technology sector.