Lenovo eyes big revenue from Mideast

Chinese technology company Lenovo Group Ltd is aiming for its Middle East businesses to account for 10 percent of total revenue within two to three years, from 2 percent at present, according to its top executive.

Amid strong growth momentum in its fiscal first quarter ended June, Yang Yuanqing, chairman and CEO of Lenovo, said this would amount to approximately $6 billion based on last year's figures, a "significant" leap from its current revenue share of around $1.25 billion, or 2 percent, from the region.

In May, Lenovo inked a strategic collaboration and investment agreement with Alat, a sci-tech company owned by the Saudi Public Investment Fund. Lenovo will establish a regional headquarters and a new manufacturing hub in the region and issue $2 billion worth of convertible bonds to Alat.

"Demand in the Middle East is accelerating rapidly, exemplified by large-scale projects with significant IT needs. There is also increasing interest in building high-performance computing and intelligent computing centers," Yang said.

Lenovo's Motorola brand is also looking to boost its market share locally, he said, adding that these factors will be crucial in helping the tech firm achieve its growth targets in the Middle East.

On Thursday, Lenovo reported strong first quarter performance, posting a 20 percent year-on-year increase in revenue to $15.4 billion, beating market expectations. The growth also marked its third consecutive quarter of revenue gains.

One of the key drivers of Lenovo's success in the quarter was its broad effort in the field of AI PCs.

According to a report by market research firm International Data Corp, AI PCs, which integrate AI into their processors and can independently run large language models (LLMs) and applications, signify a major turning point in the PC industry. This innovation is expected to initiate a new product replacement cycle.

IDC said China's PC market is projected to maintain steady growth over the next five years, with AI-powered PCs estimated to occupy 85 percent of the market share in China by 2027.

Lenovo said the group is confident that it will lead the industry in market share for next-generation AI PCs, which overall are expected to take up more than 50 percent of the PC landscape by 2027.

In addition, its strategic diversification efforts have also paid off, with non-PC revenue contributing a record 47 percent of total revenue, up 5 percentage points from the previous year.

"Looking ahead, we are both well-prepared and uniquely positioned in the market with our full-stack AI portfolio to lead in the era of hybrid AI and seize the enormous growth opportunities across our entire business," Yang said.