Chairman Yang Yuanqing announced the company's intention to establish additional manufacturing facilities outside of China to mitigate potential risks associated with the current concentration of production in China.
This strategic move aims to ensure business continuity and resilience in the face of uncertainties, including the possibility of significant tariffs on imports from China, as indicated by US President-elect Donald Trump.
Yang informed Reuters that while it is premature to forecast the policies of the incoming US administration, Lenovo is well-positioned to mitigate such risks due to its more diversified manufacturing and sourcing strategies, along with a balanced distribution of revenue across regions.
Although China continues to be its primary manufacturing hub, Lenovo operates over 30 factories across nine different markets. The company is also planning to establish facilities in Saudi Arabia following a significant investment agreement with the kingdom's Public Investment Fund, Yang noted.
On Friday, Lenovo announced a 24% increase in its fiscal second-quarter revenue compared to the previous year, driven in part by the rising demand for computers capable of handling artificial intelligence tasks, as the global personal computer market shows signs of recovery.
For the quarter ending September 30, the Chinese technology firm reported revenues of $17.9 billion, surpassing analysts' expectations of $16.0 billion, according to data from LSEG.
Net profit amounted to $359 million, surpassing analysts' expectations of $331.7 million.
In the September quarter, Lenovo's global PC shipments increased by 3% to 16.5 million units, securing a dominant 24% market share. In contrast, the overall PC market experienced a decline of 2.4% year-over-year, as reported by research firm IDC.
The rising demand for AI-capable computers has become a significant growth catalyst for the PC sector, prompting manufacturers to expedite the release of models featuring specialized chips designed for artificial intelligence applications.
Lenovo introduced its inaugural AI-powered PCs in China in May, followed by a global launch in September. Yang anticipates that AI PCs will represent 25% of Lenovo's shipments by 2025, potentially increasing to as much as 80% by 2027.
The company has strategically positioned itself to capitalize on the AI trend by enhancing its AI server and software divisions.
The Infrastructure Solutions Group, encompassing IT solutions such as servers, reported a revenue growth exceeding 60% in the September quarter compared to the previous year. This remarkable surge was primarily driven by the substantial demand for servers optimized for AI workloads in data centers.
Furthermore, the Solutions and Services Group, encompassing cloud-based software solutions for enterprise clients, achieved a revenue of $2.2 billion, demonstrating a notable increase from the previous year's $1.9 billion.