Visual China.
In 2023, when the AI model detonated the technology industry, the hardware manufacturers that had been in the doldrums for a long time finally found the next marketing point, and among them, Lenovo Group's actions can be regarded as more radical, and Yang Yuanqing, chairman and CEO of Lenovo Group, also pulled the banner of AI PC on many occasions.
In Lenovo Group (0992HK) ("Lenovo") closed at 8HK$55 shares,**328%, with a total market capitalization of about HK$106.1 billion. During the session, Lenovo's stock price fell nearly 9% at one point.
The market recovered, and Lenovo PC returned to the growth track.
According to the financial report data, Lenovo achieved revenue of $15.7 billion during the period, a year-on-year increase of 264%, which is the first time in nearly a year and a half that Lenovo has achieved a year-over-year increase in quarterly revenue; Net profit for the period was 3$3.7 billion, 23% from the same period last year. As for the progress of AI PC, which is highly concerned by the market, Yang Yuanqing said that its AI PC products will be released in Shanghai in April this year, and he also said that in the first quarter of 2024, he is confident that the three major business groups will achieve year-on-year growth, and will continue to maintain revenue growth, profit improvement and net profit growth in the 2024 fiscal year.
For the decline in net profit, Lenovo explained in the financial report that it was due to the high base of comparison in the same period last year, so the net profit recorded a year-on-year **, from the overall revenue structure, non-PC revenue accounted for more than 40% of the total revenue. From the perspective of business units, the IDG smart device business, which consists of personal computers and smartphones, achieved revenue of 123600 million US dollars, a year-on-year increase of 67% and an operating margin of 74%。Lenovo said that in addition to PCs, smartphone and tablet sales returned to double-digit growth, mainly due to the performance of North America, EMEA and Asia.
In addition, revenue from the ISG Infrastructure Solutions business was 24$700 million, according to Lenovo, generative AI products have begun to contribute to the growth trajectory of the business, but the higher costs and investments required to develop new projects have weighed on the business's profitability, and the operating performance recorded a loss of $38 million; The SSG Solution Services Group generated revenue of $2.0 billion and an operating profit of 4.0%.US$1.2 billion, up 10% and 11% year-over-year, respectively, with O&M services and project & solution services accounting for 55% of SSG's overall revenue, digital workplace solutions orders up 50% year-over-year, hybrid cloud services up 86% year-over-year, and sustainable solutions orders up 44% year-over-year.
Lenovo said in the financial report that as the PC industry destocking comes to an end, the group's core personal computer business is returning to the growth track, and the entire PC market is also showing signs of recovery. According to a report by market research agency Calanys, the global personal PC market shipments in the fourth quarter of 2023 increased by 3% year-on-year to 65.3 million units, ending seven consecutive quarters of decline. According to IDC data, 2024 will be the first year of AI PC, and the assembly ratio of new machines in the Chinese PC market will rise rapidly in the next few years, reaching 85% in 2027, becoming the mainstream of the PC market.
We are looking forward to the growth of AI PCs in the second half of the year.
Although the prospect of AI PC does make people look forward to it, the concept of AI PC was first proposed by Lenovo, but in the case of the overall stability of Hong Kong stocks, Lenovo's stock price after the release of the financial report has appeared to the best trend, which also reflects the attitude of the capital market to a certain extent.
IDC defines the development of AI PC as a dynamic concept, which is divided into the AI ready stage and the AI ON stage, the former refers to the hybrid computing power that is more targeted to AI tasks, which is mainly reflected in the upgrade of the chip computing architecture, and the CPU with integrated NPU computing unit has been introduced to the market one after another. The latter refers to an AI PC that has complete AI PC features and can provide an innovative AI experience in core scenarios. Wang Jiping, vice president of IDC China, believes that the current AI PC is in the AI ready stage.
Yang Yuanqing's statement is,It is expected that the PC market will grow by 5% this year,But the first half of the year and the second half of the year are different,I look forward to the second half of the year,The first half of the year is affected by the macro economy and AI PC thunder and rain,The application is not very rich,The replacement point will be a little later,So I am more optimistic about the second half of the year,Lenovo's AI PC products will also be launched in April this year。 Liu Jun, executive vice president of Lenovo Group and president of China, added that due to the relatively expensive AI computing power, the average AI PC may be slightly higher than that of ordinary notebooks, and Lenovo is also discussing with upstream manufacturers, hoping to have a little closer to the people**, Lenovo launched AI PC in April is expected to be $1000-1500 US dollars, working in this direction.
Judging from a series of actions of the overall head enterprises, manufacturers are gathering momentum for the arrival of the AI era, not only Lenovo, but also manufacturers including HP and Dell have layouts, and HP said that it will integrate AI elements into the new products launched in the second half of the year; Dell also advertised AI mapping, AI acceleration, and intelligent meetings in the new Inspiron 13 Pro released in December last year. Upstream chip manufacturers Nvidia, Intel, and AMD have all launched processors for AI PCs, and Intel has launched a new generation of processors Core Ultra at CES 2024; AMD launched the Ryzen Mobile 7000 8000 with NPU to meet the needs of users in the AI era.
However, since AI PCs are in the development stage, the industry does not have a clear standard. When AI chips are migrated to the PC side, there are still many aspects that need to be further improved between the vision and reality, involving its latest computing architecture design, computing power cost, business closed-loop model, etc.