Lenovo Doubles Down on AI as PC Maker Sees Revenue Growth

Lenovo reports 3% YoY increase in revenue for December quarter, exceeding analysts' expectations. Shipments of AI PCs projected to reach over 167 million units by 2027, driving a new industry refresh cycle. Lenovo plans to launch its first-generation AI PCs in the first half of this year and aims to double its market share in AI servers.

Chinese tech giant Lenovo, the world's largest PC maker, is ramping up its focus on artificial intelligence (AI) initiatives following its first quarterly revenue growth since late 2022. The company reported a 3% year-on-year increase in revenue for the December quarter, surpassing analysts' expectations. While net income fell 23% to $337 million, Lenovo remains optimistic about the future, citing its commitment to AI innovation and partnerships with key leaders in the field.

Lenovo's decision to prioritise AI aligns with the broader trend in the PC industry, as companies seek to integrate AI technology into their products and services. The projected shift in demand towards machines capable of running generative AI tasks locally is expected to drive a new industry refresh cycle. Lenovo Chairman and CEO Yang Yuanqing believes that users will increasingly require devices designed for enhanced creativity and productivity.

According to a report by tech research firm IDC, shipments of AI PCs, equipped with specialised semiconductors for local AI processing, are forecasted to exceed 167 million units by 2027. This represents a significant increase from the projected 50 million units for this year. IDC also predicts that AI PCs will account for nearly 60% of the industry's worldwide shipments in 2027.

Lenovo, which operates in over 180 markets globally, plans to launch its first-generation AI PCs in the first half of this year. The company's executive vice-president, Luca Rossi, expects Lenovo's portfolio of AI devices to expand significantly from the second half of 2024 through 2025. Additionally, Lenovo aims to double its market share in AI servers this year, according to executive vice-president Kirk Skaugen.

Lenovo's commitment to AI deployment is further demonstrated by its ongoing investment in research and development. The company has increased its R&D headcount by more than 25% year-on-year and expects its R&D expenses-to-revenue ratio for the current financial year to reach an all-time high.

In a strategic partnership with Baidu, Lenovo plans to integrate Baidu's generative AI technology into its Moto brand smartphones. This move aims to capitalize on the growing demand for AI-powered smartphones, which contributed to a 32% year-on-year increase in Lenovo's smartphone shipments in the December quarter.

Lenovo's "AI for All" strategy gained momentum at the CES trade show in January, where the company unveiled a range of more than 40 AI-powered devices and solutions. These offerings, under Lenovo's Yoga, ThinkBook, ThinkCentre, and Legion sub-brands, cater to both consumer and business needs.

With its renewed focus on AI and a positive revenue growth trajectory, Lenovo is positioning itself to capture the vast opportunities presented by the AI market. The company's commitment to innovation, pocket-to-cloud computing capabilities, and strategic partnerships will likely contribute to its continued success in the evolving tech landscape.

Lenovo reports 3% YoY increase in revenue for December quarter, exceeding analysts' expectations.
Shipments of AI PCs projected to reach over 167 million units by 2027, driving a new industry refresh cycle.
Lenovo plans to launch its first-generation AI PCs in the first half of this year and aims to double its market share in AI servers.

Source: SCMP