Lenovo says the global chip shortage will persist as earnings soar 65 percent in the second quarter

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China’s Lenovo, the world’s largest maker of personal computers, said the global chip shortage will persist into the first half of next year as it reported a 65 percent increase in earnings in the second quarter on Thursday.

The company said it was able to outperform the market by securing more components than its competitors, but acknowledged that a lack of chips “caused delays in order fulfillment and significant backlogs for PCs, smartphones and servers “.

CEO and chairman Yang Yuanqing told Reuters in an interview that his previous prediction that the shortage will remain unresolved until at least the first half of 2022 has remained unchanged.

“The shortage is being driven by strong demand, particularly in the IT and electric vehicle sectors,” he said.

The company’s shares fell as much as 5 percent after the results, Guotai Junan analyst Gin Yu said, reflected market concerns over how the semiconductor crisis, which has impacted goods from automobiles to home appliances, is affecting the market worldwide PC shipments.

Research consultancy Gartner said last month that global PC shipments growth slowed in the September quarter as anti-virus easing pushed consumer and education spending to shift priorities away from PCs, and chip shortages caused laptop shipments to move Disabled person.

Lenovo retained the title of the world’s largest PC company by shipments, although growth slowed after five consecutive quarters of double-digit growth, Gartner said. In the third quarter, Lenovo’s global market share grew 1.8 percent to 23.7 percent.

Yang said Lenovo helped through its unique hybrid supply chain model, where components are sourced externally and in-house, and although demand for educational PCs has declined, commercial demand has remained strong.

Earlier Thursday, the company reported that equity attributable income for the quarter ended September 30 increased to $ 512 million (approximately Rs.3,814 billion), compared to $ 310 million (approximately Rs.2,310 billion) ) in the same period of the previous year.

Revenue rose 23 percent to 17.9 billion rupees (approximately 1.33.395 billion rupees), slightly above the average estimate of $ 17.3 billion (approximately 1.28.906 billion rupees) by 9 analysts, according to data from Refinitive.

Despite chip supply concerns, Lenovo’s shares are up more than 70 percent last year, but investors were shocked last month when the company abruptly listed its CNY 10 billion (roughly Rs 11.642 billion) Shanghai share listing withdrew.

Yang said factors such as market conditions and the listing process were behind the decision, and said the move would not harm his business.

© Thomson Reuters 2021

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