20 years ago: The IBM PC goes to China

Help, the Chinese are coming! The news that a hitherto largely unknown Chinese manufacturer was taking over the PC business of "Big Blue" sent shockwaves through an industry dominated by the big US companies in December 2004: Lenovo bought IBM's PC division for a total of 1.75 billion US dollars.

This catapulted Lenovo to the top of the world's PC manufacturers from a standing start. At that time, the major US manufacturers dominated the market. Of the 178 million computers sold in 2004, 40 percent came from Dell, HP and IBM –, whereby "Big Blue" had a significantly smaller market share of just under 6 percent than Dell (18 percent) and HP (16 percent).

Despite all the prophecies of doom, Lenovo has remained at the top. In 2013, the Chinese company took over the market leadership for the first time – and has not relinquished it since. In the fall quarter of 2024, Lenovo sold 16.6 million PCs and laptops – - more than a quarter of all devices sold worldwide.

Acquisitions and expansion

Lenovo continues to grow in the years following the takeover. In 2008, the company sold off its mobile devices division, only to buy it back a year later. In 2011, the Chinese acquired a stake in Aldi supplier Medion. In 2014, Lenovo takes over the Motorola smartphones from Google – and also buys IBM's server division.

IBM of all companies. The long-established US manufacturer of office machines is considered the inventor of the personal computer. When the PC boom began in the 1980s, the computers assembled from individual components by the box pusher were sold as "IBM-compatible". The parts came from companies such as Lenovo, which at the time was still called QDI Legend and built mainboards, among other things.

Initially, there was skepticism: fans of the popular Thinkpad notebooks were concerned about the quality. IBM customers – including many business customers – are unsure what will happen with the warranty and support. Lenovo goes on a charm offensive – and convinces the skeptics with products. To this day, the Thinkpad is a reliable and popular workhorse.

Lenovo's history also reflects the changing role of the Chinese economy and its perception in the West. For a long time, Chinese manufacturers were only suppliers or contract manufacturers for companies in the West: China as an "extended workbench" for the major manufacturers.

The new China

This has changed over the past 20 years: Contract manufacturers in China and Taiwan are also using their know-how for their own brands. New Chinese manufacturers are driving technological innovations and setting trends. They occupy important positions in the supply chains.

But what if the Chinese secret services want access to the hardware? While the world now knows that Western intelligence agencies are responsible for the biggest eavesdropping attack on humanity to date, concerns about Beijing's influence on the global IT supply chain remain high – as another Chinese giant has recently found out: Huawei.

With the changed political climate, the conditions for Lenovo have also changed again. The company must secure its supply chains and production in the area of tension between the USA and China. Thanks to its numerous locations abroad, it believes it is well equipped to do so.

While Washington and Beijing are imposing punitive tariffs and sanctions on each other, Lenovo now wants to relocate even more production abroad. Lenovo already operates 30 factories abroad, and new ones are to be added following an investment deal with Saudi Arabia. However, the majority of production is still in China.

Economically, Lenovo is doing well despite the current slump in the PC market. The manufacturer is benefiting from the AI boom and the increasing demand for high-performance computers. In the last financial quarter, Lenovo was able to increase its turnover by 24 percent to the equivalent of almost 18 billion US dollars. Around 17 million Lenovo computers went on sale during these three months.

(vbr)