Lenovo's quarterly net profit, the world's largest PC manufacturer, halved, causing Lenovo's stock to plummet 4.5% in the Hong Kong stock market. Yang Yuanqing, Lenovo's Chief Executive Officer (CEO), noted that the tariff measures from Trump affected Lenovo's business by more than $15 million (about 2.07 billion won). PC manufacturers, who had been hopeful for a turnaround in the PC market this year, are now on alert for Trump's additional tariff policies and are engaged in a price increase game.
◇ Lenovo CEO “Tariff of 20% is certainly not a small number”
Lenovo announced on the 22nd (local time) that its net profit for the fourth quarter of the 2025 fiscal year (January-March) fell 64% year-on-year to $90 million (about 124 billion won). This is significantly below the market consensus of $230 million (about 318 billion won). Revenue increased 23% year-on-year to $16.98 billion (about 23.3 trillion won), exceeding market expectations. While sales of PCs and smartphones increased due to demand for accumulating distribution inventory ahead of the tariff increases in the U.S., profitability worsened as competition intensified. Lenovo attributed the poor net profit to deteriorating profitability in AI server and data center-related businesses due to intensified competition and losses in derivatives.
CEO Yang noted that tariffs also impacted business. He lamented, “There was no time to prepare for the tariffs.” Trump raised tariffs on Chinese products from 10% to 20% last March. Regarding this, CEO Yang estimated that the impact would exceed $15 million, stating that “20% is certainly not a small number.” Lenovo has its core manufacturing base in China, with the U.S. market accounting for 34% of its sales.
The problem is that this may not be the end. The U.S. currently exempts a 145% tariff on imports of semiconductors, mobile phones, computers, and other electronic products from China. However, the Trump administration has warned that this measure will not last long and will impose additional tariffs on semiconductors.
CEO Yang said, “We are more worried about the uncertainty and rapid changes than the tariffs,” adding that “the PC market will be impacted by tariffs or geopolitical conflicts in the long run.” Initially, there was high expectation that the demand for device upgrades due to the end of Windows 10 service and the demand for artificial intelligence (AI) laptops would boost the laptop market this year, but the industry's atmosphere is quickly deteriorating. According to market research firm Canalys, PC shipments in the first quarter increased by 9.4% year-on-year, but the demand reflected orders placed ahead of the tariffs, making it difficult to gauge the future direction of the market.
◇ Concerns over demand make price increases difficult
In this context, PC corporations are carefully considering price increases. Sampson Hu, co-CEO of Taiwanese PC company Asus, said at the Computex exhibition in Taipei, Taiwan, that “we may consider raising prices by up to 10% in the U.S. to offset tariff expenses.” However, competition with local companies such as HP and Dell in the U.S. market is fierce, making price increases a difficult decision due to the risk of weakening PC demand.
Lenovo, which maintains its market leadership, is also cautious as raising prices could lead to loss of market share to competitors. However, if additional tariffs are imposed, it is widely expected that Lenovo will also have to increase prices. Citigroup predicted that “for Lenovo, adjusting prices for consumer PC models is relatively easy, but it may take time for price negotiations for commercial PCs, which account for about 69% of total PC shipments in the U.S.”
The outlook is bleak for the PC market to revive as long as uncertainty remains unresolved. Hu, co-CEO of Ace, noted that “the original estimated growth rate for the PC market was about 5%, but due to the uncertainty of the tariff policy, most current estimates have dropped to 1% or 2%, and even to stagnation.” He anticipated that it would take time for the AI PC market, which is viewed as the 'turning card' for the PC market recession, to ripen. Hu emphasized that “the reason AI is not attracting consumers as expected is that the relevant software is still in its infancy,” adding that “it may take 1 to 2 years across the industry to build software that can fully utilize AI features.”