Two companies planning AI server manufacturing units amid data centre push: IT minister Vaishnaw

Ashwini Vaishnaw at an event hosted by Qualcomm Technologies, where the company announced the successful tape-out of its 2-nanometre chip design.

• Two companies plan to set up AI server manufacturing facilities in India
• AI data center investments in India may hit $200B post-budget announcements
• Qualcomm achieves 2-nanometre chip design milestone with India engineering teams

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Two companies are planning to set up AI server manufacturing facilities in India, driven by the sharp rise in investments in AI data centres, Union minister Ashwini Vaishnaw said on February 7.

Vaishnaw said the interest in local AI server manufacturing was a direct outcome of large-scale data centre investments underway in the country.

"So when AI data centres are getting set up in India, one direct consequence of that is now people want to start the AI server manufacturing facilities in India. Already, two companies have come, which want to vary in the coming months, the announcements will be made," Vaishnaw said.

Globally, AI server manufacturing is dominated by Taiwanese Original Design Manufacturers (ODMs) such as Foxconn, Quanta and Wistron, along with branded players like Dell, HPE and Lenovo, while platforms are largely defined by Nvidia, AMD and Intel.

This development comes close on the heels of Finance Minister Nirmala Sitharaman's proposal on February 1 for a landmark tax holiday until 2047 for foreign companies providing cloud services using data centre infrastructure located in India.

Over the past year, some of the world’s largest tech companies have announced plans to build large-scale AI-oriented data centre infrastructure in India. The biggest among them is Google’s $15-billion gigawatt-scale ‘AI data-centre campus’ in Vizag, Andhra Pradesh, projected to create over 100,000 jobs during its construction phase.

Nevertheless, Vaishnaw said AI data centres are creating downstream demand for servers, boards and other electronics, prompting companies to explore manufacturing in India.

The names of the companies and timelines for the proposed facilities were not disclosed.

Investments in India's data centre sector could rise sharply to $200 billion following the Union Budget announcements, up from the $70 billion currently under execution.

The minister was speaking at an event hosted by Qualcomm Technologies, where the company announced the successful tape-out of its 2-nanometre chip design through its India engineering centres in Bengaluru, Chennai and Hyderabad.

The 2-nanometre milestone was achieved with key contributions from Qualcomm’s teams in the three cities and marks one of the most advanced chip design efforts undertaken in India so far.

There have been concerns around the potential of low number of job creation as a result of data centre. However, Nvidia CEO Jensen Huang recently said that AI infrastructure, particularly data centres, has the potential to recreate the scale of job creation that the internet once generated when it entered India.

He said the growing AI data centre ecosystem would also accelerate domestic manufacturing of server components such as motherboards, cards and advanced printed circuit boards, aided by government electronics manufacturing schemes.

According to Vaishnaw, once advanced PCB manufacturing scales up in India, assembly of complete servers would follow naturally.

The minister added that data centres are set to become a major growth engine for the country, with committed investments already running into tens of billions of dollars and expectations of a sharp increase in the coming months. He said this would support startups and service providers that require large-scale compute to develop and deploy AI solutions.

Vaishnaw said the semiconductor push, including advanced chip design work such as the 2-nanometre tape-out, aligns with India’s broader ambition to build strength across the AI stack, spanning compute infrastructure, hardware manufacturing and skilled talent.