Mega Networks to Invest Rs 350-400 Crore in AI Server Manufacturing Factory in Maharashtra

Mega Networks, an Indian hardware firm, plans to set up a factory in Maharashtra to locally manufacture AI servers, investing ₹350-400 crore. This aligns with India's push for self-reliance in tech, but supply chain constraints remain a key challenge.

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Mega Networks to Invest Rs 350-400 Crore in AI Server Manufacturing Factory in Maharashtra

Mega Networks to Invest Rs 350-400 Crore in AI Server Manufacturing Factory in Maharashtra

Mega Networks, a leading Indian computer hardware company, has announced plans to set up a factory in Maharashtra by the third quarter of fiscal year 2024-2025 to locally manufacture artificial intelligence (AI) servers. The company intends to invest Rs 350-400 crore in FY25, with initial funding from internal accruals and debt of Rs 100-120 crore.

Mega Networks is one of two Indian companies selected for the government's production-linked incentive (PLI) scheme 2.0 for IT hardware manufacturing, which provides an incentive of around five percent on net incremental sales of goods manufactured in India. The company has a technology alliance with US chipmaker Intel, and its AI servers are optimized using Intel's Habana Gaudi 1 and 2 series and 4th and 5th generation scalable processors.

The AI servers are versatile and cater to applications such as generative AI, high-performance computing, and data center operations. Mega Networks has already identified potential orders worth nearly Rs 1,000 crore for the AI servers, with confirmed bookings of Rs 150-200 crore so far.

To support this anticipated growth, Mega Networks plans to increase its workforce from the current 110 employees to around 400 over the next year, across various functions. The company's revenue grew 30% year-over-year to Rs 300 crore in FY24, and it is targeting Rs 1,000 crore revenue within two to three years with the AI server manufacturing.

Why this matters: The growing AI ecosystem in India presents a significant opportunity for server manufacturers. However, supply chain constraints remain a key challenge, with delivery times as long as 30-50 weeks for electronic components that currently need to be imported. The development of a domestic ecosystem of parts and design capabilities will require government support.

Mega Networks' investment in local AI server manufacturing aligns with the Indian government's push for self-reliance in the technology sector. The company's participation in the PLI scheme and its partnership with Intel position it well to capitalize on the growing demand for AI infrastructure in India. However, the success of this venture will depend on overcoming supply chain challenges and fostering a robust domestic ecosystem for electronic components and design capabilities.

Key Takeaways

  • Mega Networks to set up AI server factory in Maharashtra by FY25, invest ₹350-400 cr.
  • Mega Networks selected for govt's PLI scheme, gets 5% incentive on net incremental sales.
  • Mega Networks has ₹1,000 cr potential orders, ₹150-200 cr confirmed bookings for AI servers.
  • Mega Networks to grow workforce from 110 to 400 in a year, targets ₹1,000 cr revenue in 2-3 yrs.
  • Domestic ecosystem for parts, design capabilities needed to overcome supply chain challenges.