Lenovo CEO warns rising memory costs after Q4 profit drop

Lenovo, the world’s largest PC maker, reported a 21% profit drop in Q4 amid a global memory shortage, citing a prolonged supply-demand imbalance for memory chips.

CEO Yang Yuanqing warned that rising memory costs, which doubled in the quarter, could continue to impact the industry throughout 2026.

Despite the profit drop, Lenovo’s revenue rose 18% to US$22.2 billion, driven by demand for AI-related products, which grew 72% and accounted for nearly one-third of revenue.

The company expects to maintain double-digit growth in its PC and infrastructure segments in the coming quarters. Lenovo’s shares fell 4.5% after the earnings release.

The chip shortage is affecting device makers worldwide, as supply is diverted to AI data centers and large-capacity products, limiting availability for consumer electronics.

Lenovo’s scale and supply chain relationships are seen as advantages in securing components during this period.

🔗 Source: South China Morning Post

🧠 Food for thought

Implications, context, and why it matters.

The profit drop masks strong underlying performance

The reported 21% profit decline came from a one-time $285 million restructuring charge to realign Lenovo’s Infrastructure Solutions Group (its data center unit) for AI opportunities 1.
Without that charge plus other one-time and non-cash items, adjusted net profit rose 36% to $589 million, even with higher memory costs 2.
AI-led business helped, with the infrastructure unit’s revenue up 31% to a record $5.2 billion in the same period 2.

The memory crunch is reshaping competition in the PC market

Lenovo looks set to handle the memory shortage while holding PC leadership, with market share near a record 25% based on IDC (a market research firm) figures cited by CRN (a tech industry publication) 2.
That still puts it ahead of HP at 20.8% and Dell at 14.2%, using IDC numbers cited by CRN 3.
AI demand is driving upgrades for “AI laptops,” with the market projected to grow from $32.2 billion in 2025 to $117.4 billion by 2032, according to Persistence Market Research (a market research firm) 4.
Lenovo said it signed “optimal agreements” with major component suppliers to secure longer-term supply amid expected memory-cost pressure 5.