The news: Lenovo has reported the strongest quarter in its history - $26.9 billion in revenue, up 43% year over year, and its first quarter above $1 billion in adjusted net income. The company credited a supply chain of more than 30 factories across 11 markets, most of which it owns and operates.
Lenovo called this a “unique” ODM+ model in its earnings materials: in-house manufacturing first, contract manufacturers on top. HP and Apple answered the same tariff pressure by moving orders among contract manufacturers in new countries. Lenovo built its own plants there.
Two shocks have hit that network in two years: tariffs in 2025, then memory prices this year. DRAM contract prices were on track to more than double in the first quarter, according to TrendForce, but Lenovo credits the same factories for absorbing both. Gartner ranked its supply chain fifth in its global Top 25 this year, Lenovo's highest position ever.
What changed: Over the past 18 months, Lenovo built or expanded owned plants in the regions where its customers are.
Saudi Arabia: a Riyadh plant built with PIF-owned Alat is moving from trial runs toward full commercial production this year, after a first-phase investment above $500 million. Lenovo is targeting 2 million PCs, servers and smartphones a year within two years. A second phase would take it to 8 million, one of its largest plants anywhere outside China.
Hungary: the company’s first in-house European plant, in Üllő, built to turn out 1,000 servers and 4,000 workstations a day for EMEA customers.
North Carolina: Lenovo doubled its Whitsett campus to 890,000 square feet this summer, adding about 1,000 jobs and liquid-cooling lines for AI servers.
India: AI servers designed in Bengaluru and built at its Pondicherry plant for domestic sale and export, Lenovo executives told wire service PTI.
Vietnam: US-bound laptop production moved out of China by the middle of last year, when Chinese imports faced a 40% tariff and Vietnamese imports 10%. Lenovo’s Chinese plants kept building for every other market.
Lenovo’s shorthand for the footprint is “Global/Local,” which it says “combines global sourcing and resources with local delivery.”
Regional president Tareq Alangari told Saudi outlet Al-Eqtisadiah: “Lenovo no longer only works in Saudi Arabia, but has begun working from within the Kingdom.” Riyadh now manages Lenovo operations across more than 60 countries.
CEO Yang Yuanqing told The Wall Street Journal last spring that the brief 145% tariff on China cost Lenovo just $15 million. “The challenge is not the tariff itself; it’s the uncertainty,” he said. “The more diversified you are, the more resilient you are.”
The pattern: HP and Apple made the same move over the same period, without building anything themselves. HP CEO Enrique Lores said more than 90% of the products HP sells in North America would be built outside China by the end of its fiscal 2025.
Apple pushed iPhone final assembly in India to about a quarter of global output, according to Bloomberg supplier data. The push came after CEO Tim Cook estimated tariffs would add roughly $900 million to costs in a single quarter. The factories doing that work belong to contract manufacturers such as Foxconn and Tata.
Dell COO Jeffrey Clarke said this spring, as memory costs spiked across the industry: “We’re repricing, it feels like, every day.” Lenovo signed long-term DRAM and NAND supply agreements late last year, before contract prices rose, DigiTimes reported.
The counter: None of this amounts to leaving China. Apple still assembles the large majority of iPhones in China, and Yang has said Lenovo has no plans to leave: “China still gives us a lot of advantages in manufacturing.”
US construction spending on computer and electronics plants is down 44% from its mid-2024 peak, per an IoT Analytics review of Census data. An ISM survey found 64% of manufacturers have no plans to move production to the US. The production leaving China is mostly going to other Asian countries and Mexico rather than the US.
Lenovo did not escape the memory shock either. It raised prices on commercial devices this spring despite the early supply pacts, per TrendForce.
My view: I think the ownership question gets more attention than it deserves. The useful part of Lenovo’s model is having alternatives in place before anything goes wrong: spare plants in other countries when tariffs hit, and memory contracts signed before prices rose.
HP got a similar result on tariffs without owning anything, by shifting work to contract manufacturers outside China. Both times, what mattered was having the second source lined up before the shock arrived.
What’s next: The Riyadh plant’s second phase, which would take capacity from 2 million to 8 million units a year, depends on whether regional markets can absorb the output, per Alangari.
