“We have a plan to more than double our revenue in India in the next three years. That is not just a dream; it is something we are strategically planning for as we look at growth across all product lines,” Zielinski said in an interview with CNBC-TV18.
Motorola, Lenovo’s smartphone brand, has been experiencing rapid growth in India, with a year-over-year increase of between 100% and 200%. The company aims to break into India’s top five smartphone brands within the next two years. “If there’s one market where we have high confidence in our ability to grow, it’s definitely India. So, I would say, hopefully, in two years’ time, we’ve hit that top-five mark,” Zielinski said. Motorola holds a 7-8% market share and is ranked seventh in India’s smartphone market. Lenovo plans to accelerate this growth by leveraging its strong manufacturing base and expanding its distribution channels.
The company has been expanding its PC manufacturing footprint in India, and under the Production-Linked Incentive (PLI) 2.0 scheme, it plans to ramp up production further. “We’ve begun manufacturing PCs in Pondicherry, and we’re going to continue to expand it under PLI 2.0. As a matter of fact, we’ll be developing our next PC under that incentive in the next quarter or two,” Zielinski noted. The company is also preparing to manufacture GPU-based servers for artificial intelligence in Pondicherry.
Lenovo sees India as a critical hub for AI-driven development and GPU server manufacturing. The company has already opened an R&D lab in Bangalore, focused on AI server development, including hardware, software, firmware, testing, and validation. “We truly envision India as an AI centre of excellence, a development hub for the company,” Zielinski stated. The company plans to start producing GPU-based servers for AI applications in India within a few quarters, with an eye on both domestic sales and exports.
Edited Transcript:
Q: What are the company’s expansion plans in India?
Zielinski: We are elated to be in India for 20 years. There are a lot of reasons for that. We’re huge believers in the economy. We’re huge believers in the workforce. So not having a major presence in India would just not be a smart move.
If we look at our expansion in India on a go-forward basis, I would say, first and foremost, we’ve begun manufacturing PCs in Pondicherry, and we’re going to continue to expand it under PLI 2.0. As a matter of fact, we’ll be developing our next PC under that incentive in the next quarter or two.
100% of our manufacturing for Motorola is done in India. And we actually export significant amounts of that outside of India to different parts of the world, including North America and other markets. In a couple of quarters, we’re going to start producing GPU-based servers for artificial intelligence in Pondicherry as well. So significant expansion is already happening.
If I were to place a bet, in about three years’ time, I think that number of 12 million units of exports that you just mentioned, we can easily double that on a go-forward basis over a three-year period. So, we certainly have significant plans for the country.
Q: India is also a big growth market for you. In terms of overall revenue contribution, it may be in the low single digits, 4-5%, but it’s growing very fast. I think in the nine-month FY25 period, revenue growth has been 70%, reaching $2.5 billion. What’s driving and fueling that?
Zielinski: In fact, in this last quarter that we just reported, revenues were actually up 58% in India alone. We have very stable growth on the PC side of the business. And I would say we have very fast growth in infrastructure. But the hyper-growth that we’re seeing is certainly within Motorola. If you were to isolate that alone, we were up between 100% and 200% year-over-year. We’re the fastest-growing smartphone maker in the world. We’re the fastest-growing smartphone maker in India as well. And so, we just see a huge amount of potential for that. As you can see, it’s contributing significantly to revenue growth.
Q: Is India your fastest-growing market at 58% in Q3?
Zielinski: It’s definitely one of them. Will it be our fastest-growing market for the entire year? We’re not through the entire year yet, so let’s see what happens. But it’s definitely up there in terms of where we see significant acceleration in our business.
Q: Do you think it will sustain this kind of hyper-growth for Motorola?
Zielinski: We do think it’ll sustain. Look, we’re only at 7-8% market share in India. Our aspiration would be to be in the top five in India. Our aspirations around the world are to be number three in international markets, and we’re making progress. The way we look at this is we don’t bite off more than we can chew. We become very meaningful in a market. And once we hit 10% of that market, we start to expand elsewhere.
Q: Motorola is at 7-8% in terms of market share. You want to reach 10% and break into the top five. Today, you’re number seven in terms of market share. How soon do you think you will be able to get to 10% market share or the top five?
Zielinski:
I think at this pace, it’s not more than two or so years away. If there’s one market where we have high confidence in our ability to grow, it’s definitely India. So, I would say, hopefully, in two years’ time, we’ve hit that top-five mark.
Q: You believed in Make in India well before everyone else and it became the norm. Now, you participated in PLI-1 for smartphones and now PLI-2 for tablets as well. What’s been the experience like? To what extent do you produce here?
Zielinski: In terms of experience, it’s been a difficult one, but it’s worth it. I think it’s an evolution, and we’ll continue to improve. We’ll continue to make major strides in ensuring that the components we put into our products here are also locally sourced. I think that’s a much more difficult challenge to conquer, but again, it’s something that we certainly have the right direction on and that we’ll absolutely be successful with over time.
Our manufacturing footprint will continue to increase, and the function of our exports as a fraction of the total will most definitely increase over time. We have plans to do that across all three of our product lines.
Q: You said the experience was challenging. Why?
Zielinski: Let’s put it this way. One thing we’re really good at is supply chain. Under certain schemes, there’s always a bit of a learning curve in whatever we decide to do. It’s more of an adjustment than a challenge.
Q: Trump’s tariff policies could upend supply chains as we know them, with so much uncertainty. How is Lenovo dealing with import tariffs that are there today, gone tomorrow, and may return?
Zielinski: For us, it’s another day at the office. Again, if there’s one thing we’re good at, it’s supply chain. We have 35 different facilities in nine different countries. We have an uncanny ability to manoeuvre our supply chain depending on the prevailing dynamics and geopolitical landscape. We also have a contingency plan. We’ve been contingency planning for situations like this for the better part of six to nine months. Yes, it is a volatile situation. It changes almost on a daily or weekly basis. But this is something we’re good at. It’s just another day at the office for us.
Q: India wants to be a global manufacturing hub, not just for sales in India but for exporting to the world. You export smartphones. Motorola and Lenovo smartphones are exported. What percentage is exported?
Zielinski: We can’t disclose the percentage of our business that is exported from India. But I can say that over time, India is becoming much more attractive as an export hub. It will be an export hub for our GPU-based AI servers. It will continue to be an export hub for all things Motorola. And it will most definitely be an export hub for the world as we start to develop more PCs in the country.
Q: Today, you don’t export PCs out of India?
Zielinski: That’s correct.
Q: But you plan to?
Zielinski: We definitely plan to.
Q: How significant could GPU revenues from India be?
Zielinski: If you look at our data centre business in the last quarter, revenue was up 65% year-over-year, largely due to GPU compute servers. And we haven’t even started building them here. Given India’s ambition in AI, you can imagine that we’ll certainly be building for the country very soon and exporting as we mature in that space.
Q: You mentioned that the production facility will double in the next three years. Do you think your revenues can also double?
Zielinski: I think our revenues can definitely double. We have a plan to more than double our revenue in India in the next three years. That is not just a dream; it is something we are strategically planning for as we look at growth across all product lines. The data centre segment is significant, Motorola is significant, and while we’re not number one in PCs yet, I think we could be someday. First, we’ll aim for number two, and hopefully, that can also be achieved in three years.
Q: Everything starts and ends with AI these days. Lenovo is committing a lot of money to AI. You’re planning to set up an R&D centre. Tell us about your AI plans and how India is central to them.
Zielinski: We truly envision India as an AI centre of excellence, a development hub for the company. We just opened an R&D lab in Bangalore, focused on AI server development for hardware, software, firmware, testing, validation. We have hundreds of people there. This is just the beginning of leveraging India’s expertise and talent pool for AI development.
