Lenovo, the world's second-largest PC maker, has announced its intention to commence local production of servers in India. The company aims to leverage India's manufacturing potential and utilize the government's Production-Linked Incentive (PLI) scheme to strengthen its data center business and establish India as a global export hub. This move reflects Lenovo's commitment to meeting customer demands and optimizing supply chain logistics.
Lenovo's Vision for India:
Lenovo considers India a crucial international market and plans to utilize the country as a manufacturing hub for its PCs and smartphones. With three existing manufacturing sites in India, the company is expanding its capacity to cater to newer geographies and export its products worldwide. By leveraging India's manufacturing facilities, Lenovo aims to double its $10 billion data center business growth globally.
Exploring Manufacturing Options:
Lenovo's President of the Infrastructure Solutions Group, Vladimir Rozanovich, highlighted the significance of India as a manufacturing partner in the Asian market. The company is currently exploring options, including utilizing existing facilities or forming new manufacturing partnerships, to initiate local production of servers in India. The focus will be on manufacturing high-end GPU-related products to meet the increasing demand for data center solutions in the country.
Import Management System and Local Sourcing:
India recently implemented an import management system for IT hardware products, allowing companies to import laptops, tablets, all-in-one personal computers, and servers without restrictions for a year. This system provides companies that do not manufacture these products in India with sufficient time to develop local manufacturing capabilities. Lenovo intends to comply with this system and is ramping up its "localization" efforts by sourcing components for PCs and smartphones from local vendors.
Lenovo's Commitment to Local Manufacturing:
Amar Babu, President of Asia Pacific at Lenovo, emphasized the company's commitment to doubling the localization content for smartphones in the coming years. Lenovo is actively working with industry bodies and the government to develop the component ecosystem for PCs and laptops in India. By complying with India's preferential market access guidelines, which require 50 percent of components to be locally sourced, Lenovo aims to participate in government procurement and support the growth of local manufacturing.
Growing Importance of India's PC Market:
India's contribution to the global PC market has significantly increased in recent years, surpassing Japan in terms of total addressable market. Lenovo, holding a 17 percent market share, emerged as the second-largest PC maker in the July-September period of 2023. The company anticipates that the adoption of Artificial Intelligence-enabled PCs will further boost sales, particularly in the commercial and gaming PC segments.
By leveraging the government's PLI scheme and expanding its manufacturing capacity, Lenovo aims to strengthen its data center business and establish India as a global export hub. Through local sourcing and compliance with preferential market access guidelines, Lenovo is actively contributing to the growth of the Indian PC market and fostering the development of the local component ecosystem.