Lenovo Group, the world's largest PC maker, is moving to incorporate artificial intelligence technology across its lineup of devices and services, and hopes demand for the technology will help drive a recovery in its profits.
Yang Yuanqing, chairman and CEO of the Chinese tech company, reiterated his “optimism” about AI's future during the company's annual earnings press conference on May 23. When asked specifically about downside risks not just to AI but to the company as a whole, he again emphasized AI's bright future.
“We're definitely optimistic about AI,” Yang said, adding that AI will “transform all of our businesses.” He expects AI to power not just the core PC business, but tablets and smartphones, infrastructure and services, too. And he thinks the new AI-driven business cycle could last a long time.
The post-pandemic downturn has lasted much longer than Yang originally expected, but AI seems like the company's only savior, as it still relies on PCs for more than half its revenue.
Despite a showing of improvement in the most recent January-March quarter, the company's fiscal year that ended in March was tough again, with full-year revenue down 8% from a year ago to $56.86 billion and net income down 37% to $1.01 billion, marking the second consecutive year of declines in both sales and profits.
“Despite China's struggles, we expect the recovery to continue into 2024 as new AI PCs hit store shelves later this year and corporate buyers begin replacing PCs purchased during the pandemic,” predicts Jitesh Ubrani, research manager at IDC. Worldwide PC shipments in the first quarter totaled 59.8 million units, approaching the 60.5 million units shipped in the first quarter of 2019, before the pandemic.
Adding to the excitement, PC makers such as Lenovo will likely be able to charge higher prices for AI-focused PCs. “As shipment volumes increase, prices of AI PCs are also expected to rise, creating additional opportunities for PC makers and component manufacturers,” Ubrani said.
At the press conference, Yang noted that Lenovo is celebrating its 40th anniversary and said, “AI will probably be key over the next 50 years.”
Luca Rossi, executive vice president and president of the company's Devices business unit, said that “more than a dozen” AI-related devices have already been released under his watch, with more to come, and that by 2026, he predicts that more than half of the company's overall product mix will be AI-related.
At a May 23 press conference, all six executives spoke about AI in their respective areas of Lenovo's business, but were silent when asked about the state of business in Russia, where major U.S. competitors Dell and HP withdrew after the 2022 full-scale invasion of Ukraine.
Yang was free to speak eloquently about other questions, such as the company's geographical makeup, boasting about how “balanced” it is with its operations around the world, but dodged questions about Russia.
A company spokeswoman, who was running the press conference when pressed by reporters, interjected, “As we've said before, we comply with regulations.” She did not elaborate. After the press conference, she said: Nikkei Asia “The executives didn't answer, so I answered.”
Nikkei Asia They then approached Yang seeking comment on the Russia business but were blocked by staff.
As of Thursday, more than 1,000 companies worldwide had announced voluntary downsizing of their operations in Russia, according to the website of the Chief Executive Leadership Institute (CELI) at the Yale School of Management, which has been monitoring corporate behavior in Russia since the invasion of Ukraine.
However, CELI noted that “some companies are continuing to operate in Russia undeterred.” Lenovo is one of 174 companies that CELI observed are “buying time” by “postponing future planned investments/development/marketing while continuing substantial operations.”
This article first appeared on Nikkei Asia. It is republished here as part of 36Kr's ongoing partnership with Nikkei.
