The demand for smart terminals continued to recover, and the sales of core consumer electronics products such as PCs and mobile phones continued to grow in the third quarter.
On October 14, Canalys released a report saying that in the third quarter of 2024, global smartphone shipments increased by 5% year-on-year, which has achieved growth for four consecutive quarters. This follows data tracked by Canalys showing that total global PC shipments (including desktops, laptops, and workstations) rose 1.3% to 66.4 million units, and the PC market also achieved four consecutive quarters of positive year-over-year growth.
The good market performance of smartphones and PCs highlights the recovery of the consumer electronics industry, and also shows that the industry has entered an upward growth channel, which lays the foundation for the performance growth of smart terminal manufacturers in the new fiscal quarter. As a global PC leader, Lenovo Group will also benefit from this steady growth in performance. A few days ago, Da Mo and Nomura Securities released research reports, both of which are optimistic about the performance growth of Lenovo Group based on the performance of PC business and raised their revenue forecasts. At the same time, Nomura Securities actively bullished the share price performance of Lenovo Group, and raised its target price to HK$13, maintaining a "buy" rating.
AI dominates long-term growth in consumer electronics
In the third quarter of this year, smartphones showed resilience and have achieved positive growth for four consecutive quarters. According to Canalys, this is mainly due to strong demand from emerging economies and the fact that North America, China and Europe are in the early stages of the replacement cycle. The growth of mobile phone sales reflects the recovery of market demand, and this demand side is also reflected in the PC field, specifically, under the influence of Windows system updates and natural replacement cycles, PC continues to grow moderately.
The growth of mobile phones and PCs reflects the strong start of the consumer electronics industry in the second half of the year, and the industry generally believes that the growth prospects of the consumer electronics market for the whole year are optimistic. IDC also predicts that global smartphone shipments will increase by 5.8% year-on-year to 1.23 billion units in 2024; Shipments of personal computing devices (traditional PCs + tablets) are expected to increase by 2.6% year-over-year to 398.9 million units in 2024.
For smart device manufacturers, the industry will enter the peak sales season after the fourth quarter, which will effectively boost market growth confidence. Canalys noted that handset makers are heading into the holiday shopping season with solid momentum and cautious optimism, aiming to attract consumers who have postponed upgrading their devices due to major promotions such as Singles' Day and Black Friday.
In the PC market, China's Singles' Day promotion, combined with the government's trade-in campaign, is spurring Chinese consumers' enthusiasm to buy. At present, the gradual implementation of the trade-in policy in various parts of China has significantly boosted the growth of the PC consumer market, and the "Double 11" promotion advanced to October 15 will further promote the rebound growth of the PC market.
IDC pointed out that the economic cycle, consumer replacement cycle and the emergence of emerging technologies are the key to determining the long-term direction of the market.
At present, innovative technologies led by AI technology are affecting the growth potential of the consumer electronics market, driving a wave of AI terminal innovation, and accelerating the implementation of AI mobile phones and AI PC upgrades. The industry generally believes that AI mobile phones and AI PCs, as innovative terminals, will stimulate a new round of replacement boom and drive the terminal market to continue to be strong.
Since the beginning of this year, major intelligent terminal manufacturers have launched a wealth of AI terminal products, and the large-scale growth and accelerated penetration of AI terminals have gradually emerged. In terms of AI mobile phones, IDC predicts that by 2024, AI smartphones will achieve a strong growth of 344%, accounting for 18% of the entire market; In terms of AI PCs, according to Gartner's forecast, AI PC shipments will reach 43 million units in 2024, an increase of 99.8% over 2023, and global AI PC shipments will reach 114 million units in 2025, an increase of 165.5% over 2024, and the proportion of AI PC shipments in total PC shipments will also increase from 17% to 43%.
Led by AI terminals, the growth potential of the consumer electronics market is strong, and the prosperity of the consumer electronics sector continues to rise. According to CICC, looking forward to 2H24, the moderate recovery of end-side AI innovation and smart terminal market will lead the growth of the consumer electronics industry: in the short term, the supply of new machines in consumer electronics has entered the peak season, and emerging markets have growth potential, focusing on the continuous recovery of demand; In the long run, the acceleration of the implementation of end-side AI, the innovation of terminal product interaction methods, and the upgrading of functions are expected to promote a new replacement cycle of AI PCs and AI mobile phones.
Lenovo Group leads the market and is more sung by institutions
As the world's leading smart device manufacturer, Lenovo Group continues to lead the growth of the industry, especially in the PC field, Lenovo Group ranks first in the world with a sales performance higher than the overall growth trend of the market. According to Canalys data, Lenovo Group's PC shipments continued to be strong in the third quarter, with a market growth rate of 2.8% and a market share of 24.8% in the global PC market.
The strong performance of the PC market has provided a guarantee for the steady growth of Lenovo Group's performance. Nomura Securities said that based on the current PC market situation, Lenovo Group's PC business may be higher than expected, raising its profit for the 2025-2026 fiscal year by 2-3%, while its performance in the September quarter may exceed market expectations. Da Mo expects Lenovo Group's PC momentum to continue until the end of this year, raising its profit forecast for the quarter ended September to total revenue of $17.1 billion, higher than its previous forecast by 2%. Looking ahead to the December fiscal quarter, Da Mo believes that Lenovo Group's PC business may outperform its peers, as the market share continues to increase, and the quarterly growth rate may be flat to increase by 5%.
Lenovo's market leadership is based on its efficient supply chain management, healthy inventory levels, and high investment in R&D and innovation. In particular, in terms of product innovation, Lenovo Group has actively seized the opportunity of AI development, made in-depth layout in AI PCs and AI mobile phones, and has released a number of AI PC products and launched moto AI mobile phones.
In order to enhance its competitiveness in the field of AI terminals, Lenovo Group has launched the "One Piece and Multi-Terminal" strategy, and has built the Tianxi Personal Intelligent Twins System (Tianxi AS) around it, and its AI PCs, AI mobile phones, AI tablets, AIoT and other AI terminals will be embedded with Tianxi AS, which can provide users with a full-scene and seamless AI experience.
With the support of Lenovo Group's "integrated multi-terminal", its AI PCs, AI mobile phones and other AI terminals are built into Lenovo's "Xiaotian" personal intelligent twin, which has functions such as intention understanding and active perception, short-term and long-term memory, task planning and decomposition, etc., and can call rich AI applications or applets, which is a smart assistant for various AI terminals, which can help users improve the efficiency of life, work and study scenarios. In addition, Lenovo Group has created Trusted Controller, ThinkShield security solution and other functions with "one integrated and multi-terminal" as the core, which can ensure the security of users' data and privacy.
As of the second quarter of this year, Lenovo Group's AI PC shipments increased by 228% quarter-on-quarter, and management expects that the penetration rate of Lenovo Group's AI PC will reach 50-60% by 2027.
Overall, under the guidance of AI terminal innovation, the consumer electronics industry has shown a good momentum of development, and Lenovo Group will continue to consolidate its position in the industry and achieve healthy and sustainable growth in its operating performance.