The status of the largest PC manufacturer obliges the Chinese Lenovo to fight the negative market trends that were laid down at the end of the pandemic. The company managed to end the last quarter, which was not very successful for the industry as a whole, with an increase in revenue and net profit, and most importantly, to increase the volume of product supplies in the context of a general decline in the market.
Image source: Lenovo
As Bloomberg notes, citing IDC data, Lenovo PC shipments in the last quarter increased by 3% year-on-year to 16.5 million units, although competitors Apple and Dell saw them decline by 24.2 and 4.0%, respectively. In the third quarter, as IDC analysts explain, the personal computer market took a break before the start of the sales season at the end of the year. The global PC market in the third quarter decreased shipments by 2.4% to 68.8 million units.
Lenovo’s revenue in the last quarter grew by 24% to $17.85 billion, and net profit year-on-year increased by 44% to $358.5 million. Both figures were above analysts’ expectations. The head of the company, Yang Yuanqing, shared plans to increase the number of Lenovo manufacturing facilities outside of China in order to diversify geopolitical risks. Such activity is understandable in light of the rise to power in the United States of Donald Trump, who, even during his first presidential term, imposed increased duties on goods imported from China. Now the future US president is threatening to raise the tariff rate to 60%.
Already, Lenovo has more than 30 facilities in nine different regions, so its production network is quite well diversified. The agreement with Saudi Arabia allows Lenovo to organize PC production in this Middle Eastern country. In the global market, Lenovo now holds a share of about 24%, ahead of the American HP Inc. by 4.3 percentage points. Lenovo began supplying computers with local acceleration of artificial intelligence systems to the Chinese market back in May of this year. According to management forecasts, a quarter of Lenovo-branded PCs shipped to the market next year will have this functionality, and by 2027 this share will grow to 80%.
In the server business, Lenovo’s revenue grew more than 60% last quarter, also driven by rising demand for AI-enabled data center equipment. The direction of solutions and services, covering the cloud segment, brought Lenovo $2.2 billion in the third quarter, which is more than last year’s $1.9 billion.