Lenovo Reiterates No Plan to Manufacture Vehicles

On August 10, Yang Yuanqing, Chairman and CEO of Lenovo, responded at the communication meeting after the release of the financial report that the company had no plan to enter into the vehicle manufacturing field.

Previously, the company published its “Lenovo Research Can Make Car” through its official WeChat account, which aroused some concern throughout the automobile industry. In this regard, Yang Yuanqing said that the company will strengthen its research and development field around situation-based computing, and the above recruitment is only a forward-looking exploration of Lenovo Research in the future computing field.

On August 10, Lenovo also announced its results for the first quarter of fiscal year 2022/23 ending June 30, 2022. The financial report shows that the turnover of the company reached 112 billion yuan ($16.59 billion) in the first quarter, an increase of 0.2% year-on-year. Net profit was 3.4 billion yuan, a year-on-year increase of 11%. Adjusted net profit was 3.67 billion yuan, an increase of 35% year-on-year.

From the perspective of business segmentation, the smart device business is still Lenovo’s most important revenue stream. Quarterly revenue of this business reached 94.2 billion yuan, a decrease of 2.7% year-on-year. The decline is due to severe challenges to its core PC business.

According to IDC data, the global traditional PC shipments in the second quarter of 2022 were 71.3 million units, a decrease of 15.3% year-on-year. Among them, Lenovo shipped 17.5 million units in the second quarter, a decrease of 12.1% year-on-year. Lenovo’s PC market share reached 24.6% in the second quarter, which is an increase compared to the 23.7% in the second quarter of 2021.

Yang Yuanqing said that Lenovo achieved double growth for nine consecutive quarters in the first fiscal quarter under multiple challenges such as epidemic prevention and control, overseas inflation, changes in exchange rates and supply shortages. Although the market share of the PC business has dropped by more than 10%, the decrease of Lenovo is still relatively small compared with other competitive enterprises. Lenovo, meanwhile, continues to exert its strength in this field, which will increase the average selling price of PCs, and its profitability has so far remained at the same level as last year.

Regarding the company’s smartphone business, Yang said, “Last year, the smartphone business generated a profit of $400 million, which is a great change compared with the loss before the acquisition. For Lenovo’s smartphone business, the focus of the previous stage was to make the cost structure of the business competitive, so it was not an expansion but contraction.”

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In terms of business performance aside from PCs, Yang mentioned that, after years of cultivation and investment, the SSG, ISG and smart smartphone business have become Lenovo’s three new growth engines, reaching turnover growth rates of 23%, 14% and 21% respectively during the reporting period. Ex-PC businesses will make up for weaker demand and declining sales in the PC market, and will continue to increase Lenovo’s profit margin.