Lenovo: Confident in ensuring memory supply, significant growth potential for ISG business

Lenovo Group (00992.HK) Senior Vice President and Chief Financial Officer Zheng Xiaoming stated that the company is large in scale and has maintained good relationships with suppliers over the years, thus confident in ensuring memory supply. He believes that smaller computer manufacturers will be more affected by the memory shortage. Regarding the impact of U.S. tariffs, Zheng Xiaoming mentioned that it has largely eased, as the company has adjusted its global supply chain, allowing products to enter the U.S. market at the lowest tariff levels.

Lenovo recently announced its third-quarter performance, with AI-related revenue growing 72% year-on-year, accounting for 32% of the group's total revenue. Zheng Xiaoming believes that the group's Infrastructure Solutions Group (ISG) has significant growth potential in the future, benefiting from the surge in demand for AI data centers and AI servers. At the same time, the group's financial investment in the restructuring of this business has largely been completed, and it is expected to save over $200 million in net costs annually in the coming years.

Zheng Xiaoming mentioned that the gross margin of the group's AI personal computer products is higher than that of general personal computers, while the gross margin of AI servers is lower than that of general servers. However, he expects the gross margin of AI servers to grow to be comparable to that of personal computer products in the next one to two years