Lenovo Sees 10%-12% Industry PC Shipments Decline for 2022

PC demand within Lenovo’s Intelligent Devices Group (IDG) “is experiencing a short-term challenge, but people recognize the necessity of the PC as a key productivity tool,” said CEO Yang Yuanqing on an earnings call Wednesday for fiscal Q1 ended June 30. The total addressable market for PCs still “is expected to be much higher than pre-pandemic levels in the long term,” he said.

The company in the quarter “outgrew the market to strengthen our No. 1 position in PCs, driven by strong growth in premium segments such as gaming and workstations,” said Yang. Lenovo’s smartphone revenue as owner of the Motorola brand increased by more than 20%, he said. The “impressive part” is that growth didn’t come from just “our traditional stronghold markets of Latin America and North America, but also the expansion markets of Europe and Asia Pacific,” he said.

Lenovo’s diversification beyond PCs continues, and now nearly 22% of IDG’s revenue comes from “non-PC” sources, including smart devices, embedded computing, IoT and smart home, said Yang. IDG revenue in the quarter declined 3% year on year, “primarily from the weak consumer PC demand and the COVID-led supply constraint,” said Chief Financial Officer Wong Wai Ming. Non-PC sales with IDG grew 12%, he said.

Lenovo feels good about the long-term health of the PC industry, said IDG President Luca Rossi. Hybrid work is among the “unstoppable trends” that Lenovo sees “right at the center” of that optimism, he said.

“We also see additional opportunity” in the “huge, 400 million-plus” installed base of PCs that will need to be “replaced and refreshed,” said Rossi. “We also feel good about the quality of this demand,” and its shift toward higher-end devices, better features and “new services designed for the new hybrid,” he said.

At Lenovo, “we certainly recognize short-term headwinds obviously driven by unfavorable macro inflation, exchange rates and consumer confidence,” said Rossi. Based on “a softer PC market than we anticipated,” Lenovo estimates industry PC unit shipments will finish calendar 2022 “at a number between 300 million and 310 million, which implies a 10% to 12% year-over-year decline,” he said.