Lenovo's 2023/24 Annual Report: Chairman & CEO Opening Letter

As we close another fiscal year, I am pleased to share with you the important progress we have made in our transformation as well as our vision and plans to embrace the AI era to deliver the next wave of growth and innovation.?

A Remarkable Year of Resilience

I am proud that Lenovo has demonstrated strong resilience and navigated through our industry cycle relatively smoothly. Even amidst the market downturn, we resumed growth in the second half of the fiscal year and accelerated our momentum in the fourth quarter . As a result, we emerged out of the challenges with strong core competencies, efficient operations, healthy financials and profound transformation.

Our smart devices business has bounced back from the market decline before the overall industry recovered, delivering industry leading profitability, number one share in PCs, and strong growth in smartphones. Our smart infrastructure business is among the leading players in the global AI infrastructure, well positioned to capture the industry transitioning opportunities from traditional to AI infrastructure. Our high performance computing and Neptune water cooling technology continue to set the industry benchmark. Even more, our smart solutions and services business has proven to be a high-growth, high-margin driver for our continued diversification and service-led transformation, gaining wider customer adoption with our horizontal building blocks in digital workplace, edge AI, hybrid cloud, TruScale and sustainability solutions.

Most importantly, we remain committed to our investment in innovation, especially around AI. With over one quarter of our employees now working in R&D and the highest ratio of R&D expenses to revenue, we are ready to capture the unprecedented potential in AI, a once-in-a-lifetime opportunity for Lenovo.

The Hybrid AI Opportunity

There is no doubt that the AI revolution is already happening and impacting the way we live and work. At Lenovo, we believe the future will be defined by hybrid AI, a coexistence of public, personal and enterprise AI to supplement and enhance each other.

This is because consumers and enterprise customers are increasingly looking for ways to “land” AI into their everyday life and routine operations, while public AI models have limitations in terms of privacy, security, speed and costs.

At Lenovo, we are leveraging our model compression technology to make personal AI operate on personal smart devices or edge devices, receive commands through natural interactions, perform inferencing, and never share users’ personal data to the public cloud unless authorized by the users.

We believe the best “landing” path is to embed personal AI model into computing devices, like PC or smartphones. As the world’s #1 PC vendor and a major tablet and smartphone player, we have in-house design and manufacturing capabilities as well as a global scale to make our devices become a natural platform for AI applications.

Similarly, we are enabling enterprise AI to reside across multiple endpoint devices and infrastructure within an enterprise. This facilitates learning and inferencing, supporting business operational decisions, improving productivity and management efficiency, all while ensuring information security.

?As AI workload will run not only on public cloud, but gets more evenly distributed among on-prem data centers, private and hybrid cloud, and even edge and devices, a hybrid infrastructure across client, edge, network, cloud and intelligence will be in higher demand. Even more, complex infrastructure requires comprehensive services and customized solutions for enterprise customers, thus creating more opportunities for smart solutions and AI professional services for the future.

It is our point of view in this hybrid AI future that makes me confident about Lenovo’s ability to grasp the unprecedented opportunities in the AI era. Starting from the AI PC and expanding into other AI-enabled, AI-ready, and AI-optimized devices, infrastructure and solutions, we are ready to embrace a new decade defined by AI.

Lenovo’s AI Decade

The year 2024 marks the 40th anniversary of Lenovo. We’ve been through a remarkable journey over the past four decades, from entrepreneurship to building our own brand, and from globalization to diversification. Now, we are entering a whole new decade of AI. This is an incredibly exciting time for our industry and for Lenovo. We will continue to innovate, transform, make AI accessible, fair and inclusive, and bring smarter technology to all.

Yuanqing Yang

Chairman and CEO

Lenovo

Read Lenovo’s FY2023/24 Annual Report: click here?