Intel has been counting on the data centre business to help offset declining demand for its chips used in personal computers, its biggest revenue generator. The business from India grew at 50% even last year. As part of that growth strategy, the company bought Altera for $16.7 million earlier this year.
"When businesses mature you tend to buy not the cheap servers but the high end ones as your business is dependent on technology. Over the last three years, Flipkart’s number of servers has gone up by 10 times. With more smartphones penetrating the Indian market and Reliance rolling out its 4G network, demand for this will only grow in the future," Diane Bryant, senior vice president and general manager, data centre group, said.
Revenue from that business in India represents just 1%, or $143 million, of the company’s total revenue in the segment. Santa Clara, California-based Intel reported total revenue of $14.38 billion from its data centre business in 2014.
Intel said while India has been slow in building its infrastructure required to support the growth of digital economy, 2015 is the first year where the growth and numbers suggest the country is finally coming of age in regard to demand for servers.
"Given what we are seeing in terms of massive hyper scale build up, the trajectory will change compared to the last three years as Digital India starts getting funded and played up," Rajeeb Hazra, vice president, Intel’s data centre group, said on Wednesday.
The company, which claims to have a 96% market share in the country’s server business, also expects server sales to grow about 10-20% this year. It sold 258,000 servers in 2014-15.