Eleven years after Lenovo acquired IBM’s x86 server biz, profits are still elusive
(2025/11/20)
- Reference: 1763619043
- News link: https://www.theregister.co.uk/2025/11/20/lenovo_q2_2026/
- Source link:
Lenovo has again said its enterprise hardware business is on the cusp of becoming consistently profitable, despite the division again posting a loss after massive revenue growth.
The Chinese hardware champ today posted $20.5 billion of revenue for its second quarter, a 15 percent year-over-year improvement. Profit fell one percent, to $380 million. Lenovo’s enterprise hardware biz, the Infrastructure Solutions Group (ISG), outperformed the company in terms of revenue growth with its $4.1 billion revenue coming in 24 percent higher than in the corresponding quarter last year. Even with that extra revenue, it again posted a $32 million loss.
Lenovo built the ISG on the x86 server business it acquired from IBM in 2014, but then could not run at a profit until [1]2022 before it again sank into the red. ISG has since posted a mix of tiny profits and modest losses.
[2]
Company leadership thinks it can finally set ISG on a course to profitable growth by “optimizing Enterprise SMB business models to better serve the distinct needs of enterprise and SMB” and thinks increased demand for inferencing workloads will help increase demand for its wares. For now, Lenovo is largely content with its sales to hyperscalers, pointing to 154 percent growth in sales of liquid-cooled systems.
[3]
[4]
Chairman and CEO Yuanqing Yang joined the ranks of industry execs [5]dismissing talk of an AI bubble.
“The substantial investments in AI infrastructure are laying the groundwork for the next major technology wave, much like the early internet era,” he said, noting how that wave delivered “explosive growth in PCs” and gave rise to the smartphone industry.
[6]
“What's happening now is the next wave of AI democratization, spreading across both personal and enterprise use, which is perfectly aligned with Lenovo's strategy,” Yang said.
[7]Lenovo puts the 'cloud' in cloud computing, proposes mid-air datacenters
[8]Long live the nub: ThinkPad designer David Hill spills secrets, designs that never made it
[9]Lenovo shows what a Chromebook packing a MediaTek Kompanio Ultra can do
[10]Lenovo bags HPC contracts for a pair of European customers
Perhaps the performance of Lenovo’s Intelligent Device Group (IDG), which sells PCs, smartphones, and other personal tech, proved his theory by delivering quarterly revenue of $15.1 billion, 12 percent year-over-year growth. The company was chuffed by analyst reports that found it remains the planet’s foremost PC vendor, with 25.6 percent market share. AI PCs accounted for a third of all PC shipments, and the company won 31.1 percent of Windows AI PC sales.
Lenovo company sold a record quantity of Motorola smartphones and predicted future growth as it improves its range of premium products.
Motorola may also help Lenovo to handle rising memory prices. Yang said the company is one of the world’s biggest memory buyers, and in the past has struck deals with top-tier suppliers for parts needed across all its products.
“We are very confident we can manage this situation better than our competition to ensure not only we have enough supply, not just for short term, but for the entire year next year,” he said. With server memory prices tipped to rise sharply, perhaps Lenovo’s supply chain could be the way ISG finally achieves solid ongoing profits? ®
Get our [11]Tech Resources
[1] https://www.theregister.com/2022/11/04/lenovo_isg_profitable_four_quarters/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2025/11/19/nvidia_earnings_q3_2025/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2025/11/06/lenovo_datacenter_vision/
[8] https://www.theregister.com/2025/08/02/thinkpad_david_hill_interview/
[9] https://www.theregister.com/2025/06/24/chromebook_plus_kompanio_ultra_lenovo/
[10] https://www.theregister.com/2025/06/11/lenovo_bags_hpc_contracts_for/
[11] https://whitepapers.theregister.com/
The Chinese hardware champ today posted $20.5 billion of revenue for its second quarter, a 15 percent year-over-year improvement. Profit fell one percent, to $380 million. Lenovo’s enterprise hardware biz, the Infrastructure Solutions Group (ISG), outperformed the company in terms of revenue growth with its $4.1 billion revenue coming in 24 percent higher than in the corresponding quarter last year. Even with that extra revenue, it again posted a $32 million loss.
Lenovo built the ISG on the x86 server business it acquired from IBM in 2014, but then could not run at a profit until [1]2022 before it again sank into the red. ISG has since posted a mix of tiny profits and modest losses.
[2]
Company leadership thinks it can finally set ISG on a course to profitable growth by “optimizing Enterprise SMB business models to better serve the distinct needs of enterprise and SMB” and thinks increased demand for inferencing workloads will help increase demand for its wares. For now, Lenovo is largely content with its sales to hyperscalers, pointing to 154 percent growth in sales of liquid-cooled systems.
[3]
[4]
Chairman and CEO Yuanqing Yang joined the ranks of industry execs [5]dismissing talk of an AI bubble.
“The substantial investments in AI infrastructure are laying the groundwork for the next major technology wave, much like the early internet era,” he said, noting how that wave delivered “explosive growth in PCs” and gave rise to the smartphone industry.
[6]
“What's happening now is the next wave of AI democratization, spreading across both personal and enterprise use, which is perfectly aligned with Lenovo's strategy,” Yang said.
[7]Lenovo puts the 'cloud' in cloud computing, proposes mid-air datacenters
[8]Long live the nub: ThinkPad designer David Hill spills secrets, designs that never made it
[9]Lenovo shows what a Chromebook packing a MediaTek Kompanio Ultra can do
[10]Lenovo bags HPC contracts for a pair of European customers
Perhaps the performance of Lenovo’s Intelligent Device Group (IDG), which sells PCs, smartphones, and other personal tech, proved his theory by delivering quarterly revenue of $15.1 billion, 12 percent year-over-year growth. The company was chuffed by analyst reports that found it remains the planet’s foremost PC vendor, with 25.6 percent market share. AI PCs accounted for a third of all PC shipments, and the company won 31.1 percent of Windows AI PC sales.
Lenovo company sold a record quantity of Motorola smartphones and predicted future growth as it improves its range of premium products.
Motorola may also help Lenovo to handle rising memory prices. Yang said the company is one of the world’s biggest memory buyers, and in the past has struck deals with top-tier suppliers for parts needed across all its products.
“We are very confident we can manage this situation better than our competition to ensure not only we have enough supply, not just for short term, but for the entire year next year,” he said. With server memory prices tipped to rise sharply, perhaps Lenovo’s supply chain could be the way ISG finally achieves solid ongoing profits? ®
Get our [11]Tech Resources
[1] https://www.theregister.com/2022/11/04/lenovo_isg_profitable_four_quarters/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2025/11/19/nvidia_earnings_q3_2025/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aR70yG2OehbTn8EZkAVv7AAAAI8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2025/11/06/lenovo_datacenter_vision/
[8] https://www.theregister.com/2025/08/02/thinkpad_david_hill_interview/
[9] https://www.theregister.com/2025/06/24/chromebook_plus_kompanio_ultra_lenovo/
[10] https://www.theregister.com/2025/06/11/lenovo_bags_hpc_contracts_for/
[11] https://whitepapers.theregister.com/
Lenovo makes servers?
ComputerSays_noAbsolutelyNo
Never seen one in the wild serverroom. But my experience is limited, though.
"the next wave of AI democratization"
And the best way to do that is make it optional instead of ramming it into everything you can possibly think of. Give users a simple option to turn off all this AI crap if they don't want it (they never bloody well asked for it in the first place) and then leave them alone. And why should I have to pay more for a laptop or server because it has an AI chip inside when I don't want it, don't trust it and will actively avoid trying to use it?