Electronics Inc runs ops update to build AI infra

Kolkata: India’s electronics manufacturing industry is expanding into high-tech products for data centres and artificial intelligence (AI) infrastructure, moving up the value chain after establishing a stronghold in smartphones and venturing into semiconductor chips, seeking to tap into surging global demand and position the country as an export hub.

Leading contract manufacturer Dixon Technologies plans to manufacture for AI infrastructure and hyperscale data centres, including silicon photonics-based optical transceivers and advanced packaging solutions. It may begin some production as early as next quarter.

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Multinationals such as Samsung and LG, along with the homegrown Voltas, Blue Star and PG Electroplast, are also entering the market for specialised heating, ventilation and air-conditioning (HVAC) systems used in data centres. The products will cater to both domestic demand and exports, executives said.

“The biggest buoyancy today globally in electronics manufacturing is on the AI and data centre side, and the whole technology is shifting towards the optical domain,” Atul Lall, managing director, Dixon Technologies, told analysts earlier this month. “Our global peers’ performance, margin profile and growth, is coming mainly from this domain. We are attempting to ...bring this technology into India for servicing global markets.”

Temperature Control Systems

Specialised manufacturing in these segments would offer higher margins even at relatively low volumes, he said.

Industry executives said local production could help India emerge as a challenger to established manufacturing hubs such as China, Taiwan and South Korea. The government estimates that investments of around $200 billion could flow into India’s data centre industry.

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Dixon is actively pursuing opportunities in silicon-photonics, optical transceivers and advanced packaging through acquisitions and partnerships. It is forming a joint venture with Taiwan’s Gemtek Technology to manufacture optical transceivers, with operations expected to begin next quarter. The company is also exploring precision engineering and deeper technological capabilities in optical solutions.

South Korean electronics firms Samsung and LG are also looking to make India an export base for specialised HVAC systems used to cool AI data centres. Samsung group company FläktGroup set up a dedicated factory in Pune last quarter for these products, with exports destined for Asia-Pacific. The facility is expected to scale up production to 6,500 units annually.

LG will manufacture specialised HVAC solutions at its upcoming plant in Sri City, which is expected to go on steam in December, an industry executive said.

Domestic companies are also eyeing data centre cooling as a growth opportunity. Blue Star managing director B Thiagarajan said the company expects a significant increase in order inflows from data centre projects in the coming months.

“We estimate that this year, perhaps around 10,000 crore to 12,500 crore worth of orders (from data centres) might be finalised. We have indicated that we are already close to 2,000 crore worth of orders, and we will do another 2,000 crore,” he said.

PG Electroplast managing director (operations) Vikas Gupta said that HVAC systems for AI data centres involve a completely different technology from conventional room air conditioners.

The company is evaluating an entry into the segment, given its high growth potential.