"China+N" model drives Lenovo (00992) to achieve record high performance in Q1, with double-digit growth in revenue and profit from the Chinese market.

On August 14, LENOVO GROUP (00992) released its financial report for the first quarter of the 2025/26 fiscal year ending on June 30, 2025. The quarterly revenue increased by 22% year-on-year to 136.2 billion RMB, reaching a historical high for the first quarter; The net profit under non-Hong Kong financial reporting standards also increased by 22% year-on-year, reaching 2.816 billion RMB, and doubled to 3.66 billion RMB according to Hong Kong financial reporting standards, significantly enhancing profitability and starting the fiscal year with strong momentum. Specifically, all of Lenovo's core business revenues achieved high double-digit growth rates, with the non-PC business accounting for 47% of total revenue in the three major business groups and achieving high or relatively high revenue growth rates in all global regions, with the Asia-Pacific and China regions experiencing the fastest growth. Of note, as Lenovo's global headquarters and the vanguard and experimental field of its hybrid AI strategy, the Chinese market, facing a complex market environment, achieved significant revenue and profit growth, with revenue reaching a historical record for the same period, growing by over 35% year-on-year, accounting for a quarter of global revenue, and profits increasing by 43% year-on-year. The non-PC business revenue accounted for over half, reaching 54.9%, marking a historical breakthrough. This achievement was attributed to China's resilient economic development, the AI industry reaching a crucial turning point, and the continuous implementation of Lenovo's hybrid AI strategy. Data shows that China's GDP grew by 5.2% year-on-year in the second quarter of 2025, with the first half-year growth rate reaching 5.3%, maintaining a leading position among major economies in the world. National subsidies and policies promoting the replacement of old appliances continued to release consumption potential. As a result, Canalys data shows that the Chinese PC market, after experiencing 11 quarters of contraction, saw a 10% year-on-year increase in shipments in the second quarter of the natural year. Furthermore, the Chinese AI industry is speeding up its transition to the industrial application stage, with AI industry scale continuously expanding and forming a complete industry system covering infrastructure and industry applications. As innovative terminals and smart bodies are deployed, AI technology is transforming into "application productivity," driving rapid growth in China's AI applications and accelerating globalization, while the AI gap between China and the US is narrowing. At the same time, the State Council deployed detailed implementation of the "AI+" initiative to vigorously promote the commercialization of AI at scale. In this context, Lenovo is actively seizing this trend, meeting the growing demands of the Chinese market with its hybrid AI ecosystem covering individuals and enterprises. On the business side, Lenovo's Intelligent Devices Group (IDG) achieved a revenue growth of over 17% year-on-year in the Chinese market, with a 27% penetration rate for AI-powered PCs in the Chinese notebook market, and the smartphone business also achieved rapid growth of 87% year-on-year in the Chinese market. In the Infrastructure Solutions Group (ISG), China led Lenovo's global market performance, with revenue increasing by over 70% year-on-year and servers experiencing a growth of over 80%. The Solution Services Group (SSG) in the Chinese market achieved double-digit growth in revenue and profit, landing super-intelligent bodies in cities like Mount Wuyi in Fujian and Yichang in Hubei with revenue and profit growth exceeding 20% year-on-year. Compared to the industry's "China+1" single mode, Lenovo has built a strong competitive advantage through its unique "China+N" mode. The "China+N" network, with China as the headquarters, radiates to nodes in Southeast Asia, Saudi Arabia, Brazil, Mexico, Europe, etc., with 80% of the global production capacity still remaining in China. LENOVO GROUP stated that China, as a global manufacturing center, possesses irreplaceable advantages, including a complete supply chain ecosystem, efficient production capacity, and a mature industrial talent pool. "Made in China" itself is one of Lenovo's most important global resources. At the same time, Lenovo has established more than 30 self-operated or cooperative manufacturing bases in 11 markets worldwide, forming a synergistic system with China and constructing an efficient and flexible global supply chain network. This model not only maintains the scale and efficiency advantages of Chinese manufacturing but also, through localized operations, achieves rapid response to the market, reduces external risks, enhances customer satisfaction, compliance capability, and other multiple "last mile" values. By deepening overseas markets, Lenovo can better integrate global resources and feedback to the domestic market. Currently, about 80% of Lenovo's production manufacturing, 70% of its R&D personnel, and 60% of its employees are in China, while 75% of its revenue comes from overseas, truly rooted in China and connecting globally. The performance of this quarter also validates the effectiveness of this strategy, enabling Lenovo to respond calmly to external shocks and continuously achieve robust growth and enhanced global competitiveness.