Mega Networks to set up AI server facility in Mumbai by end of the year

IT infrastructure company Mega Networks is in the final stages of setting up a facility in Mumbai to manufacture AI servers locally, with an initial investment of Rs 100 crore.

“We are already in the final process of acquiring the land in Mumbai and completing other obligations... so probably by this month end or by the coming month we'll close the deal,” said Amrish Pipada, CEO, Mega Networks, in an interaction with Business Standard.

He said that the firm was finalising the machinery and the right kind of talent for the facility, and production is expected to start by the end of this year. However, the company declined to comment on the production capacity of its plant.

Mega Networks is an advanced networking solutions provider known for producing indigenous AI servers in India, partnering with chip giants like NVIDIA, Intel, and AMD.

The company, which recorded a revenue of Rs 300 crore in FY24, is planning an investment of Rs 100 crore in the new facility and is expecting a revenue growth of 30 per cent in FY25.

“We are projecting to invest approximately Rs 100 crore across various areas, including land acquisition, machinery, and other expenses. The funding for this will be sourced from both internal accruals and long-term debt financing,” said Pipada.

“Our intention is to grow by Rs 1,000 crore in revenue in the coming two to three years,” he further added.

In November 2023, the homegrown server manufacturing company was one among the 27 firms selected by the government for the production-linked incentive (PLI) scheme 2.0 for IT hardware.

The firm launched a locally manufactured server powered by the 4th Generation Intel Xeon processor in February this year and is now working on 6th and 7th generation servers.

Currently, the percentage of indigenous components in servers manufactured by the company stands at around 51 per cent, with parts such as CPU memory still imported. However, the firm is working to scale this composition to 70 per cent.

The company is also keen on expanding into semiconductor packaging soon. Currently, it is exploring technical partnerships with some South Korean and Taiwanese counterparts to venture into the domain with plans of setting up an Outsourced Semiconductor Assembly and Test (OSAT) facility in the future, said Pipada.

“We are just understanding the nitty-gritty of OSAT and we are in initial discussions with various companies from Taiwan and Korea and other places for a technical partnership,” he added.