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00:00You know, we've been talking about Intel and that recovery story.
00:03I'm just wondering, is this a reflection of the PC chip market?
00:08I mean, how are you reading the numbers from Intel?
00:11Thanks for having me on the show, Aslinda.
00:13No, actually, the market has been quite strong.
00:15We declared our Q1 results.
00:18That's the latest that I had for April, May, June.
00:20It was very strong.
00:22Worldwide, we grew at 22%.
00:24Our PC business particularly grew at over 20%.
00:28Our infrastructure grew with a lot of AI-related investment.
00:33So, overall, the market has been quite strong.
00:35And particularly in Asia-Pacific, we even grew faster at 29%, accounting for almost 19% of
00:42the revenue.
00:43So, yes, very strong demand, definitely in the market.
00:48Well, it's been a strong recovery.
00:50The question is whether that's sustainable.
00:52What are your own assumptions for 2026?
00:55Is that expected to pick up yet again?
01:00So, you know, when we look at, obviously, we have a few key drivers.
01:05One of the key drivers was and continues to be AI.
01:08We see this, and I think we are just at the entry of a long decade of AI transformation.
01:14And we believe that customers will continue to invest as they build AI into their businesses,
01:20into their processes, into individuals.
01:23So, our vision of hybrid AI, personal AI, enterprise AI, public AI, and we see investments happening
01:29across the board.
01:31Significant investment is expected.
01:33We also had the transition from Windows 10 to Windows 11, as Microsoft announced their
01:40end of support for Windows 10.
01:43And that also drove a lot of refresh.
01:45So, and we need to keep in mind that there was a huge adoption of PCs and other devices
01:49during the COVID era.
01:51And about five years ago, right?
01:53So, we are coming to the point where these PCs and devices are up for refresh.
01:58We have the AI innovations coming up.
02:02So, I think together, we believe that we will continue to see sustained growth.
02:06So, Amar, this is Mandeep.
02:10If I can pick your, you know, comments on what's driving your PC demand.
02:17Is it, are you selling more x86 PCs or ARM-based PCs or, you know, AMD is the channel where you're
02:26finding more success?
02:27Just help us kind of understand the pockets of the strength that is coming from AI for you.
02:34So, we are doing it across the board.
02:36I mean, obviously, we have partnerships.
02:38We are an ecosystem player, very strong partnerships with all the vendors that you mentioned.
02:44And we are actually seeing growth across the board.
02:47Our AIPC business, our AIPC mix, actually, is almost about 30% now.
02:53And we see that continuing to grow.
02:55Customers are looking for that power.
02:57They see that once you're able to get the right applications, you will find the productivity
03:03improvements that will pay for itself.
03:05So, I think the refresh, the need for refresh coupled with the AI is definitely driving the
03:12demand that we are seeing in the market.
03:15Is this demand stronger than the demand that you saw around the COVID refreshes?
03:21Or where would you stack it against, you know, some of the highest demand that you have seen
03:26for refresh cycle in the past?
03:30Well, I think, I mean, COVID obviously was a unique kind of a situation.
03:36So, there was a lot of different kind of demand.
03:39It was not really refresh.
03:41It was because people were using technology to do their daily course.
03:45So, looking at the refresh of that, I think it is one of the sequences that we are seeing
03:50every time in terms of the five-year cycle.
03:53And we are seeing the refresh come up.
03:55So, I would say it is strong enough, similar.
03:57I don't have exact comparisons, but I think it is quite strong.
04:01And it's reflected in our numbers, right?
04:03As we are growing 22% year on year, it's a pretty significant growth on our base.
04:10I mean, in Asia Pacific alone, at 39%, our revenues for Q1 was $3.5 billion, $3.7 billion.
04:17So, it is a pretty strong growth that we are seeing.
04:23Amar, geopolitics still top of mind, U.S.-China tensions, and, of course, the curbs on chips.
04:30I'm just wondering, how much impact has that been on Lenovo?
04:36I think, you know, we operate in 180 markets.
04:40We've been a global company for 20 years.
04:42Tariffs, geopolitics, it's actually part of the environment.
04:48And I think it is something that is, it's not unique to Lenovo.
04:51It's a backdrop business for all organizations.
04:54And we believe that it's key how you adapt to the environment and remain flexible
04:58during these uncertainties.
05:00And that's something that we've built up.
05:02You know, the two models that we are very proud of is,
05:04we have our global local model, where we leverage our global scale,
05:09scale, global technology, global R&D, global supply chain, manufacturing,
05:15but combine it with very local execution in each of the markets that we have.
05:20And the global supply chain, specifically, our ODM Plus model,
05:24it's a good mix of Lenovo's own manufacturing, plus our ODM partners across,
05:30you know, we have our own site across 30 locations.
05:33That allows us to actually have a unique, end-to-end, you know, agile,
05:39flexible, and resilient model.
05:41So, we've been able to work within that to adapt quickly,
05:45depending on some of these moving parts in the environment.
05:49You also have a manufacturing site in the U.S.
05:52And just wondering if you're planning to do more on the back of what we're seeing right now,
05:56the tensions between the two countries.
05:58So, we look at manufacturing as truly a global supply chain.
06:03As you mentioned, we have manufacturing in U.S.
06:06We are manufacturing in 30-plus types across the world.
06:10We're actually investing in Saudi Arabia.
06:13One of our partners, Alat, invested $2 billion with us.
06:16And we are building a state-of-the-art plant in Saudi Arabia.
06:19We have manufacturing in Asia Pacific and China.
06:22So, we look at this as a global supply chain and try and build the flexibility
06:27so that we can adapt, depending on the situation as to where we would meet our customers' demands the best from.
06:35And so, that continues to be an ongoing process of looking at it
06:38and making sure that we are able to adapt quickly within each of the different manufacturing sites.
06:44So, would you assess, you know, where the demand is in terms of AI PCs?
06:53Because Intel CEO last night called out 290 million PCs for 2025 and growing in 2026.
07:00Would you think that's the right ballpark?
07:03Or are you higher or below that number in terms of your own view?
07:08So, we definitely believe that AI PCs will continue to become a bigger part of the business.
07:13As I mentioned, we are already at 30%.
07:15We expect that in two years' time, almost 70% of all PCs will be AI PCs.
07:21And our own innovation roadmap, our own product roadmap, also reflects those investments that we are making in R&D accordingly.
07:30So, we are definitely seeing AI.
07:32You know, there are, I would say, three parts to the investments for AI.
07:37First is the infrastructure.
07:38You know, the data centers started off with the public AI.
07:41Now, we're seeing enterprise customers build up inferencing-based infrastructure.
07:47And then you have the front-end devices, which is PCs, as you mentioned.
07:50And then personal use, right?
07:51You and I as consumers.
07:54And we are seeing that build up.
07:56Obviously, what underlines all of that is the solutions and the services that tie up.
08:01And this is where we at Lenovo believe that there's an opportunity because we have this unique ability as a full-stack service provider to cut across hardware, services, solutions, data, and be able to provide those solutions to our customers.
08:14So, we see the opportunity across all of these.
08:18And I believe that you will see the growth coming up through these AI-related investments from all these different vectors.
08:26I mean, one of the cynical views that I've heard is these AI PCs still can't run the LLMs on device.
08:35You still have to go through, you know, the server.
08:38And that is what has slowed things down.
08:41Or I guess that's where the bare argument comes from.
08:44So, do you think these AI PCs would be good enough to run these large language models on device?
08:50Absolutely.
08:52You know, we have very powerful devices that can definitely have local applications.
08:59You know, one of the key things about, which is why our hybrid AI model comes in, when we talk about personal AI, our vision is to make the device and the solution build up as an AI twin potentially, right?
09:13A twin that understands with you, makes your productivity significantly higher.
09:18But the data and the privacy remains within the PC itself.
09:23And for which, of course, you need to have models that can run and the power of the PC that can support it.
09:29You know, with 40-tops-plug kind of operation, I believe we have the power.
09:34What we need is, of course, the solutions and the right applications to be able to leverage that power.
09:39And we are seeing very strong use cases come up where we are already seeing some of these coming.
09:44And I think that as you see more innovation coming up, you will see customers moving into AI PCs and definitely being able to leverage the technology and the power.
09:57Amar, we also know that you've been trying to grow your non-PC business.
10:01Where are you with that?
10:02We're actually growing very well.
10:06Today, you know, 47% of Lenovo's global revenues comes from non-PC business.
10:13And that's basically across our infrastructure business, our services business, and our smartphone business.
10:20We're growing extremely well, particularly here in Asia, for speak, as well.
10:24We've been growing very strongly in all these areas.
10:28So these were our faster-growing businesses.
10:32And we are seeing that reflect, as I mentioned, our overall business is growing at 22.
10:37And these businesses are growing even faster, which is exactly our strategy, that these would be our growth drivers.
10:44And we're seeing that happen in our results.
10:47Amar, just one final question.
10:49It's a macro question.
10:50I mean, these are uncertain times.
10:52Trade deals are trying to be signed by leaders.
10:56Inflation is an issue.
10:57There's so much uncertainty out there for you as you grow your business.
11:01What's the biggest risk out there?
11:04I think, you know, one of the strengths that we have is actually, as I mentioned, our global local and our global supply chain.
11:14So I think we need to be very adaptive.
11:16And that's clearly something that we have built into the way we work.
11:20And we believe that AI can be a very good tool to help us navigate some of these uncertainties as we start looking at how to balance, where to balance.
11:29So I believe that, you know, bringing in this technology, bringing in the culture, bringing in our operational model that we have built up over a period of time gives us that ability to adapt.
11:39I think adaptability, building a resilient model is the key.
11:43And our research shows that we are making progress and we have done well.
11:46And we'll continue to work with that strategy.
11:49And we are very confident that this is something that exactly becomes a strength of Lenovo in this kind of an environment to work with what we have built.
11:58And we'll continue to work with that strategy.
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