On August 10, according to Reuters, Lenovo Group recorded its lowest revenue growth in nine quarters due to weakened demand after the market boom triggered by the new crown epidemic and the impact of domestic restrictions on the epidemic.
The results justify Lenovo's strategy of focusing on developing non-personal computer (PC) businesses such as smartphones, servers and information technology services, which together now account for more than a third of its sales, the report said.
In terms of revenue, Lenovo's total revenue in the April-June period was US$16.96 billion, a slight increase of 0.2% year-on-year. While broadly in line with a Refinitiv average of $16.87 billion from seven analysts, it was Lenovo's smallest increase since the March 2020 quarter.
However, Lenovo's net profit attributable to shareholders rose 11 percent to $516 million in the quarter.
Lenovo's sluggish business growth coincided with a cooling of the global PC industry after a surge in sales triggered by the new crown epidemic and prompted companies such as chipmakers Intel and Samsung Electronics to warn of a sharp slowdown in demand.
Global notebook computer shipments fell 11.1 percent year-on-year in the last quarter, the largest year-on-year decline since the second quarter of 2013, research firm Counterpoint said.
Lenovo's total PC shipments fell 12.7% to 17.4 million units, mainly due to weak consumer demand, Counterpoint said. However, the Chinese company still maintained its lead in the global PC market with a 24.4% share.
Additionally, China's lockdowns hit the PC supply chain this quarter, with major notebook makers including Quanta, Compal and Wistron all experiencing major manufacturing disruptions, according to a Counterpoint report.
Supply chain improvement
Lenovo Group Chief Financial Officer Huang Weiming said on an earnings call that quarterly revenue from Lenovo's devices business fell 3% due to "weak consumer PC demand and supply constraints caused by the Covid-19 pandemic."
But he said revenue from the non-PC equipment business rose 12 percent. Revenue from smartphone sales rose more than 20 percent from a year earlier.
Yang Yuanqing, chairman and chief executive of Lenovo Group, said he expects global PC shipments this year to be between 300 million and 310 million units. That would be down nearly 10 percent from the 341 million units shipped last year by research firm Canalys.
In addition, Yang Yuanqing said that the supply chain shortage that plagued many hardware makers earlier this year has been improved.
"We're still facing shortages in some areas, especially in the data center business," he said. "In general, I don't see significant challenges in the second half of the year."
Yang also added that Lenovo has seen some price increases in the semiconductor industry, but the company will remain flexible in dealing with component price fluctuations.