Lenovo‘s Personal Computer Shipments Expected to Rebound | TiPost Focus

Lenovo Group’s Global Supplier Conference 2023 showcasing smart manufacturing scene (Image source: TiPost App editor’s photograph)

BEIJING, May 18 (TiPost) — As tech giant Apple is dispersing its supply chain system and accelerating the shift of smartphone manufacturing supply chains, attention has turned to whether Lenovo Group, the world’s largest personal computer and server provider, is considering similar operations.

TiPost App has learned that on May 17th at the Lenovo Group’s 2023 Global Supplier Conference, Yang Yuanqing, Chairman and CEO of Lenovo Group, revealed that the demand for smart devices such as personal computers and smartphones has been boosted during the pandemic. From 2019 to 2021, Lenovo’s total shipment of smart devices/loT (personal computers, smartphones, tablets, etc.) reached 150 million units. Despite current inventory adjustments in the PC and smartphone markets, he believes that the shipment volume of personal computers nearly hit the bottom and may grow as early as the second half of 2023.

In addition to smart devices, Yang Yuanqing stated that Lenovo’s server business has grown from fourth to third globally over the past three years, and over 40% of the group’s revenue comes from non-PC businesses. Although the global economy is facing challenges, the group is confident in digital and intelligent transformation.

After the conference, Xu He, Chief Transformation Officer of Lenovo Group’s global supply chain and CEO of LinkDoc, told TiPost App that nearly 90% of the above-mentioned 150 million units of shipped devices were produced and sent out from China. Currently, Lenovo Group has 35 global production bases.

Regarding the new changes in the manufacturing industry, Xu He emphasized that Lenovo’s entire supply chain is not just a production cost issue, but also involves comprehensive support, policy transparency, and stability. As China is transitioning from low-end manufacturing to developing high-end manufacturing, this situation will arise. Therefore, while everyone can keep a close eye on the transfer of the supply chain system, it is not yet a determinative and decisive process of zero-sum game. “Currently, domestic industrial technology investment still has significant advantages.”

It is reported that Lenovo Group was established in 1984 and listed on the Hong Kong Stock Exchange in 1994. Around 2017, Lenovo Group started its transformation and upgrade, strengthened its profitability and market position in the personal computer and tablet industries, and built its data center business into a sustainable profitable growth engine, focusing on “devices + cloud” and “infrastructure + cloud”, and further laid out the intelligent Internet of Things and accelerated the strategic layout of intelligent ecology. Lenovo also set the “3S strategy” as the direction of change, namely the three fields of intelligent products, intelligent infrastructure, and intelligent services, to seek transformation and layout for the new cycle.

To comprehensively promote the “3S strategy”, Lenovo Group has undergone multiple organizational structure reforms and is now divided into three groups to implement business operations: IDG (Intelligent Device Business Group), ISG (Infrastructure Solution Business Group), and SSG (Solution Services Business Group), with GOO (Group Operations) providing systematic capabilities such as sales operations, supply chain, customer and user experience.

During the past three years of the epidemic, under the gradually formed “new normal” of online office globally, Lenovo successfully entered the market of digital new dividends, not only producing computer equipment but also becoming a digital service provider.

At the conference, Lenovo Group’s Senior Vice President and Global Supply Chain Leader Guan Wei proposed the Digital Transformation 2.0 plan. Guan Wei further explained that in the Digital Transformation 2.0 plan, Lenovo Group’s goal is to work with partners to establish an industry-leading digital collaboration platform, achieve 100% data connection for primary partners, gradually promote secondary partners, achieve end-to-end progress, interconnectivity, and overall success; secondly, Lenovo and its partners will rely on transparent and reliable data, as well as artificial intelligence technology, to use big data and machine learning systems to optimize plans and achieve fully intelligent self-improvement solutions based on “process reengineering, rule unification, and data standardization”; finally, Lenovo Group aims to achieve digital transformation with all partners, including the entire supply chain ecosystem, and realize proactive data analysis-driven business decisions, execution, and human-machine interaction closed-loop management within the next five years.

At the same time in 2020, Liensheng Zhida, led by Xu He, was born. It is a strategic platform for Lenovo Venture Capital and Lenovo Global Supply Chain to empower external enterprises. Its main goal is to help domestic enterprises expand overseas markets and provide international enterprises with intelligent supply chain integration solutions such as intelligent manufacturing and intelligent logistics. Among them, Liensheng Zhida’s solution for supplier quality management system has increased enterprise management efficiency by 25%, reduced personnel investment costs by 20%, and saved production loss costs of more than 3 million yuan.

So how did Liensheng Zhida achieve this? Xu He mentioned that this intelligent supply chain scenario-based solution mainly includes intelligent prediction, intelligent procurement and supplier collaborative layered management, intelligent order management, quality intelligent ecological management, and intelligent logistics delivery services.

Xu He revealed to TiPost App that Lenovo Group’s Tianjin Smart Park is expected to be completed and put into production in October this year.

Since this year, news about the transfer of the “fruit chain” has stirred up the nerves of the upstream and downstream of the industrial chain. Xu He believes that this is a mutually reinforcing and propelling effect.

He pointed out that although the transfer is considered to consider the resilience needs of the supply chain, the labor supply in China is also very tight now, and the labor costs in some overseas regions have “inverted”. So far, the entire industrial technology investment in China still has certain advantages. At the same time, from the perspective of global manufacturing, it is necessary to consider the systems, regulatory environment, labor supply, industrial supporting facilities, international logistics, and transportation hubs of each country. If any link cannot meet the needs of large-scale production, decisions need to be made carefully in advance. Moreover, it is necessary to see that China is developing its own high-end manufacturing industry, so this supply chain transfer plan is not just a production cost issue.

Regarding the issue of multiple cloud vendors lowering prices, Xu He told TiPost App that it is actually not sustainable to fight a price war just to win. In addition, if the pressure on the industry chain is only transmitted downward, and not like Tesla’s structural and disruptive innovation, this kind of low-price competition is meaningless. “If this kind of indiscriminate and purely price war continues, I believe that customers and consumers may be hurt in the end.”

Yang Yuanqing said that in the future, Lenovo Group will still face many opportunities, such as the super growth plan in the smartphone field; focusing on deeper component innovation in the tablet field; and the booming artificial intelligence in the infrastructure business. He also said that it is expected that in the next three years, edge computing will grow by 17% per year, and enterprise software will grow by 12%. “We are shifting from entry-level storage to higher-end products, such as hyper-converged storage, and increasing investment in China.” (This article first appeared on TiPost App, Author: Lin Zhijia)

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