Lenovo aims to use "scale advantages" to combat the rising tide of storage prices

On February 12, Lenovo Group disclosed its third-quarter performance, showing that for the three months ending December 31, 2025, revenue was $22.2 billion, an 18% year-on-year increase; however, net profit for the same period was $546 million, a decline of over 20% year-on-year.

Specifically, the smart device business revenue grew by 14% year-on-year; AI-related revenue increased by 72%, accounting for 32% of the group's total revenue.

Despite the impressive performance on the revenue side, the pressure on costs cannot be ignored. Lenovo Group's gross margin in the third quarter decreased by 0.6 percentage points year-on-year to 15.1%.

Looking ahead to 2026, the rising prices of a series of components, including storage, continue to put pressure on costs.

In this regard, Lenovo Group Chairman and CEO Yang Yuanqing admitted that the price increase of storage in the last quarter reached 40% to 50%, and the increase this quarter "may double," with the trend of price hikes spreading to more core components.

In the face of cost challenges, Yang Yuanqing emphasized Lenovo's "scale moat."

Yang Yuanqing believes that the rise in storage prices has indeed caused supply chain disruptions, but Lenovo, leveraging its scale advantages in PC, mobile phone, and server businesses, can secure sufficient supply guarantees and competitive prices.

Moreover, according to Yang Yuanqing, PC sales in 2026 are expected to remain flat or slightly decline, but due to the increase in average unit prices, sales revenue in the market will achieve growth. Lenovo is confident that with its advantages in supply chain, operations, and technological product innovation, it can maintain double-digit growth in the coming quarters.

In this context, whether Lenovo Group can continue to maintain high-quality growth under cost pressure is drawing attention.

From the overall situation of consumer hardware, with the price adjustments of terminal products, a decline in sales may have become an industry consensus.

In fact, the same is true for the mobile phone sector. There have been rumors in the market that Xiaomi, OPPO, vivo, and Transsion have lowered their shipment expectations.

With the upcoming wave of rising upstream storage prices in 2026, hardware manufacturers' profit margins are bound to be further squeezed. Whether they can stabilize costs through price increases and the scale advantages of the supply chain will be the key to determining the winners and losers