Lenovo Group Ltd. has begun developing AI servers in South India, the latest boost to the quickly growing country's efforts to become a high-tech powerhouse.

The business said Tuesday that it has begun manufacturing huge, powerful computers in Pondicherry, southern India, expanding beyond laptops and smartphones. The Chinese corporation will also expand its operations in the Bangalore area, including a research facility focused on artificial intelligence.

Lenovo's ambitions are another triumph for India as Prime Minister Narendra Modi seeks to lure more technological investment. While India's strained relationship with China has suffered setbacks in recent years, global technology companies view it as an appealing location to expand operations as Beijing and Washington engage in a trade war.

The servers execute the computations required to operate applications such as generative AI, which has gained popularity through apps like ChatGPT. The inclusion of AI servers means Lenovo will manufacture its full hardware stack in India for both domestic and international markets, highlighting the country's importance to the firm.

While India's technology manufacturing industry remains modest in comparison to China, it is catching up and currently produces more complex items such as iPhones. AI servers are another milestone that demonstrates India's ability to compete with regions with more established high-end manufacturing sectors.

Taiwan presently manufactures the majority of the world's AI servers, which are utilized by IT behemoths like Amazon.com Inc., Microsoft Corp., and Nvidia Corp. However, as geopolitical tensions between China and the West escalate, corporations are under pressure to relocate industrial operations outside of Taiwan. Demand for generative AI tools and applications has driven increased demand for associated gear, with electronics giant Foxconn Technology Group forecasting that yearly AI server sales would reach $150 billion by 2027.