Lenovo released its financial report for the first quarter of the 2023/24 fiscal year (1QFY23/24) ending on June 30th. It saw revenue of US$12.9 billion, marking a decrease of 24% YoY, and the operating profit was US$390 million, reflecting a decline of 50% YoY.
Within these figures, the Intelligent Devices Group (IDG), which encompasses smart devices including PCs, tablets, and smartphones, reported revenue of US$10.3 billion, a drop of 28% YoY, and an operating profit of US$650 million, down by 39% YoY.
Lenovo stated that it continues to hold a leading position in the global PC market. According to IDC data, in the second quarter of 2023, Lenovo surpassed HP and Dell to become the champion in terms of market share for shipments. The overall PC market declined by 13.4%, with Lenovo, HP, and Dell experiencing declines of 18.4%, 0.8%, and 22% respectively.
Furthermore, Lenovo emphasized that during this period, it has been actively managing inventory, achieving steady progress, and preparing for future sales growth through inventory clearance.
In terms of regional markets, revenue from the China market decreased by 29%. The demand for PC and infrastructure businesses declined, but the Solution and Services Group (SSG) witnessed double-digit growth. The Americas market contracted by 21%, with the IDG reporting a double-digit decrease in revenue. However, inventory levels in North America have rebounded to pre-pandemic levels. The EMEA market as a whole also saw a revenue decline of 29%.
Lenovo is optimistic about the new opportunities brought by Artificial Intelligence (AI). Bloomberg highlighted that companies in the Chinese market like Baidu and Sensetime are developing services similar to ChatGPT, which is expected to drive growth of Lenovo’s AI servers in the region. Over the next three years, Lenovo plans to invest US$1 billion to enhance its AI technology.
Goldman Sachs analysts also believe that the current market’s demand for computing power and AI is driving the need for Lenovo’s terminal devices. Lenovo has numerous key customers in the international market, and the expectation is that its server business market share will increase. Lenovo will also continue to upgrade its product line.