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Lenovo Views U.S.-China Tariff Pause as Positive Amid AI Growth

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Chinese PC maker Lenovo (0992.HK) said Thursday that the recent tariff pause between the U.S. and China is a positive development and highlighted strong growth in China’s AI infrastructure despite ongoing tech tensions.

“The truce is a positive situation,” Lenovo CEO Yang Yuanqing told Reuters following the release of the company’s fiscal first-quarter results. “We feel better than the previous quarter — it brings more certainty rather than uncertainty.”

The U.S. and China have extended a tariff pause for another 90 days until November, avoiding triple-digit duties on each other’s goods and providing temporary relief to businesses.

Lenovo reported total revenue of $18.8 billion for the three months ending June 30, up 22% year-on-year and surpassing analysts’ forecast of $17.4 billion, according to LSEG data. Yang attributed the growth to strong AI demand across the company’s three main business segments, each of which achieved double-digit growth.

Despite a 30% U.S. levy on Chinese exports, including PCs, Lenovo’s CEO noted that the U.S. represents less than 20% of the company’s total revenue, and tariffs have so far had minimal impact thanks to Lenovo’s global manufacturing network. Net profit attributable to shareholders more than doubled year-on-year to $505 million, exceeding the consensus estimate of $307.7 million.

AI PCs represented over 30% of Lenovo’s PC shipments in the first quarter, while the AI server business surged 150% amid strong domestic demand. “We see a strong pipeline in AI servers,” Yang said.

China has recently advised major internet firms to be cautious when purchasing Nvidia H20 chips and to consider domestic alternatives, following the U.S. approval to resume H20 chip sales to China. Yang highlighted Lenovo’s investment in diversifying its supply chain and developing local component products to meet varied customer needs.

Lenovo shares dropped more than 3% in early trading Thursday, underperforming the Hang Seng Index, which rose 0.4%. However, the stock has gained 15% over the past three months, outpacing the benchmark.

Lenovo Q4 Profit Plunges 64%, Misses Forecasts Amid Tariff Blow

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Lenovo, the world’s largest PC maker, reported a 64% year-on-year plunge in fourth-quarter net profit, falling far short of analysts’ estimates and triggering a sharp 5.4% drop in its share price on Thursday.

The company blamed the profit collapse largely on a fair value loss on warrants and the unexpected imposition of 20% tariffs on Chinese imports by U.S. President Donald Trump in March, targeting fentanyl-related goods but affecting broader categories.

“The 20% tariffs announced in March were implemented suddenly and left us no time to prepare. It had a significant impact on our numbers in the last quarter – it’s not a small number,” CEO Yang Yuanqing said during an earnings call.

Key Financial Results (Jan–Mar Quarter):

  • Net Profit:
    $90 million, vs. $225.8 million expected (LSEG consensus)
    ↓ 64% YoY

  • Revenue:
    $15.72 billion,
    ↑ 23% YoY, exceeding analyst forecast of $15.6 billion

Business Unit Highlights:

  • Infrastructure Solutions Group (ISG):
    Revenue ↑ 64% YoY, driven by server demand

  • Solutions and Services Group (SSG):
    Revenue ↑ 22%, reflecting strong enterprise cloud software sales

  • Personal Computing (PC):
    Continued global leadership but margin pressure remains amid tariff uncertainty

Tariff Impact and Strategy:

Yang confirmed that Lenovo may raise product prices if tariffs persist. He emphasized that the company’s 30 manufacturing facilities across more than 10 countries provide flexibility to adjust operations and mitigate future trade risks.

Although many U.S.-China tariffs imposed since April were rolled back, the 20% fentanyl-related levy remains, continuing to strain Chinese tech firms like Lenovo.

Market Reaction:

  • Lenovo stock:
    ↓ 5.4%, vs. Hang Seng index decline of 1.3%

Intel Weighs Sale of Networking and Edge Unit in Strategic Refocus Under New CEO

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Intel is considering divesting its networking and edge computing division — previously known as NEX — as part of a broader strategy to streamline operations and refocus on its core strengths in PC and data center chips, according to sources familiar with internal discussions.

Under new CEO Lip-Bu Tan, the tech giant is evaluating the relevance of its diverse business units to prioritize areas where it maintains market leadership. Tan emphasized at an event in Taipei that Intel commands 68% of the PC chip market and 55% of the data center chip market, and plans to “expand and build on” those domains.

Although no formal sale process has been launched yet, Intel has initiated early-stage discussions, spoken with third parties potentially interested in the NEX business, and interviewed investment banks to possibly advise on the transaction. However, no advisor has been officially retained, and options remain open.

Sources indicate that the networking and edge unit — which generated $5.8 billion in revenue in 2024 — is no longer seen as essential to Intel’s growth plans. The company now folds NEX’s financials into its broader PC and data center segments, eliminating separate reporting.

The telecom-focused segment within NEX is especially seen as misaligned with Intel’s new direction, and competitors like Broadcom dominate significant parts of the networking market, further reducing Intel’s strategic incentive to compete there.

While Intel has not committed to a full divestiture, it may explore partnerships, stake sales, or restructuring alternatives. The potential NEX sale follows other recent portfolio adjustments — notably, the $4.46 billion sale of a majority stake in its Altera unit to SilverLake in April. That move came after previously planned IPO ambitions for Altera under former CEO Pat Gelsinger.

Despite this refocusing, Intel continues to face pressure as it loses ground in the PC and data center markets, making Tan’s efforts a critical pivot point for the company’s future trajectory.