Lenovo, world’s largest PC maker, to launch factory in Saudi Arabia

Silicon Valley headquarters of Lenovo. (Photo via Smith Collection/Gado/Getty Images)

Technology giant Lenovo will further diversify its supply chain and plans to open more manufacturing facilities outside China amid global geopolitical uncertainty, Chairman Yang Yuanqing said.

Lenovo, the world’s largest PC maker, has most of its plants in China, a common situation in the electronics industry that creates potential vulnerability as US President-elect Donald Trump threatens to impose 60 per cent tariffs on Chinese imports.

Yang told Reuters that while it’s too early to predict the new US administration’s policies, Lenovo has an advantage over competitors in hedging such risks through its more diversified manufacturing base and sourcing strategy, as well as balanced regional revenue streams.

While China remains its main manufacturing base, Lenovo operates more than 30 factories in nine different markets. The company plans to open facilities in Saudi Arabia following a major investment deal with the kingdom’s Public Investment Fund, Yang said.

On Friday, Lenovo reported a 24 per cent rise in its fiscal second-quarter revenue from a year earlier. That was partly spurred by sales growth of computers that can handle artificial intelligence workloads as the global personal computer industry showed signs of recovery.

The Chinese technology company reported revenue of $17.9bn for the quarter ended September 30, exceeding analysts’ expectations of $16bn, according to LSEG data.

Net profit reached $359m, compared with analysts’ estimates of $331.7m.

Lenovo’s global PC shipments rose 3 per cent to 16.5 million units in the September quarter, maintaining its commanding 24 per cent market share. Across the industry, global PC shipments fell 2.4 per cent from a year earlier, according to research firm IDC.

Demand for AI-capable computers has emerged as a key growth driver for the PC industry, with manufacturers racing to launch models equipped with specialised chips for artificial intelligence applications.

Lenovo launched its first AI-powered PCs in China in May before rolling them out globally in September. Yang expects AI PCs to account for 25% of Lenovo’s shipments by 2025, rising to as much as 80 per cent by 2027.

Lenovo has positioned itself to benefit from the AI trend by expanding its AI server and software businesses.

The company’s Infrastructure Solutions Group, made up of IT solutions including servers, saw revenue in the September quarter grow by more than 60% from a year earlier, driven partly by strong demand for servers handling AI workloads in data centres.

Its Solutions and Services Group, which includes cloud-based software offerings for enterprise clients, posted revenue of $2.2bn, up from $1.9bn a year earlier.