Lenovo has set an example for global players committing to India

Many times, when we see any global technology major expanding its operations to India and reinforcing its commitment to the country, not just only as a consumer market, but as a technology value chain location, they play safe.  These global companies either bring in the older technology to the country or do low order value addition.  Even in the jewel of electronics, smartphones, the value addition has not gone beyond 25-27% in best endeavours where CKD level manufacturing is taking place in India.

There are several examples to highlight where we can observe that the India play is very restricted, through third parties, and the technologies being pursued are not among the latest and emerging ones.

Here Lenovo has taken a different approach.  It has set up a complete value chain that includes an end-to-end R&D facility along with a manufacturing line for making enterprise grade AI servers as well as high-end GPUs that will not only serve the rising domestic needs but also will cater to the exponentially fattening demand for AI infrastructure world over.

This, while positions Lenovo very uniquely on the emerging technology landscape, especially AI, also takes India to the next pedestal of its journey in the emerging AI value chain.  The development is different in many ways.

• If we look across the technology stack including software and hardware, servers are still primarily imported into India.  With this step, the entire technology stack becomes locally available in India.  India is now on the map of servers which will only grow further.
• Setting up of the R&D and product design facility in India will help Lenovo to scale up the domestic value addition in no time.  As and when the semiconductor ecosystem also becomes available in the country, Lenovo would have the advantage of leveraging it most.  This facility is among Lenovo’s only such 4 establishments globally.
• Lenovo has brought India on the AI value chain map both from R&D and manufacturing perspectives.  This helps the country to contribute from early times to the emerging and very important field of AI.  The government has been making all positive facilitations to have India’s important role in AI and Lenovo has reciprocated this thought.
• The R&D facility is an end-to-end facility that requires high tech skills to operate.  While such talent is available in the country, this will also push the academia to facilitate education in such emerging domains.  There might be a need felt soon about starting courses in ‘design engineering’ that go beyond the basic understanding of skilling CAD and similar tools.
• AI is one of the key areas of the tech startups that are sprouting across the country.  With such facilities available within the country, they will get access to very powerful infrastructure and Lenovo can also play the role of being an anchor organisation to help the promising ones evolve and grow further.

Lenovo will of course be benefitted from the enabling policies that the government has invoked in recent years and participate in co-creating the technology value chain and building blocks in India.  But where I find them different is that they do not seem to be too much after incentives and sops that the government offers.  They rather see it as a reward which will come their way automatically if they do the right commitment. They have already shown this in case of making PMA compliant PCs with ‘Make in India’ motherboards.

One more thing where I found them different was that at no point did, they talk about the ecosystem not being ready yet, or they expect the government to do more, or they want more clarity about the policies. In other words, they were not making any kind of ‘excuses’ which we commonly see with many other global technology companies who show them as major ‘roadblocks’ in their vision for committing to India.

If other technology companies will also adopt this approach, I don’t see government having any reservations or hesitations in supporting them in co-creating the technology value chain in India. But in many other cases, we see companies beating behind the bush and not doing much pragmatically expecting government to take the first step.  Perhaps this approach of Lenovo also has kept it insulated from even someone thinking about the origin of the company.  This Lenovo model of commitment to India is what others need to follow if they are serious about India.

The above blog is based on the exclusive analyst briefing that was done by Lenovo Asia Pac and India leadership in Bangalore on September 18^th, 2024.  I too attended the briefing on the invitation of Lenovo.