Lenovo Posts 16% Drop in Q2 Revenue to $14.4 bn Amid PC Spending Decline

Lenovo Group, a global technology leader, faced a 16 percent revenue dip in the second quarter ending September 2023, with figures plummeting to $14.4 billion. This decline was attributed to a reduction in consumer spending on PCs and laptops, a sector that constitutes 60 percent of the company’s total sales.
Lenovo ThinkPad T480S
The latest IDC report said PC shipments are forecast to decline 13.7 percent to 252 million units in 2023. PC shipments are forecast to grow 3.7 percent in 2024 reaching 261.4 million shipments.

Despite this setback, Lenovo generated a net income of $273 million during the same period.

The breakdown of their main business sectors during this quarter revealed both successes and challenges:

SSG’s Record-Breaking Performance: Lenovo’s Software and Services Group (SSG) soared to new heights, achieving record revenue of $1.9 billion and an impressive operating margin of 20 percent.

ISG’s Decline Amid Industry Challenges: The Infrastructure Solutions Group (ISG) faced a decline in revenue, totaling $2 billion. This dip was a result of broader macro-economic industry headwinds, economic slowdown, and platform migration. However, ISG excelled in segments like storage, software, services, High-Performance Computing (HPC), and Edge growth.

IDG Maintains Leadership Despite Market Challenges: Despite a year-on-year revenue decline to $11.5 billion, the Intelligent Devices Group (IDG) retained its global No.1 position in PC shipments and activations. IDG upheld a strong operating margin of 7.4 percent, showcasing profitability resilience.

Smartphone Business Shows Growth: Lenovo’s smartphone division witnessed double-digit premium to market shipment growth, although the overall market remained flat.

Lenovo’s Chairman and CEO, Yuanqing Yang, in its earnings report, emphasized the company’s commitment to an intelligent transformation strategy. Yang stated, “With our AI ecosystem and partnerships strengthened, we will leverage our full-stack AI capabilities from pocket to cloud, driving sustainable growth for our business.”

At the recent Tech World innovation event in October, Lenovo outlined its vision of ‘AI for All’, highlighting a hybrid AI model where public, private, and personal foundation models coexist. The aim is to enable AI for everyone while prioritizing security and privacy. Lenovo plans to expand its smart device portfolio, integrating AI into PCs, smartphones, tablets, and optimizing infrastructure, solutions, and services for AI readiness.

To further drive this vision, Lenovo announced an additional $1 billion investment in AI-driven innovation. This commitment aims not only to achieve ‘AI for All’ but also to foster sustainable growth across the entire business.

Lenovo’s strategic focus on AI integration across its diverse product lines and strong investments in innovation underscore its ambition to lead the technological landscape with inclusive AI solutions.