China’s Lenovo Group warned on Thursday about mounting pressure on PC shipments as a worsening memory-chip shortage grips the industry.

CEO Yang Yuanqing said in an interview after the company released third-quarter results that the world’s largest PC maker has raised prices to offset surging memory costs, while accelerating its push into the fast-growing AI inference market.

“We expect PC unit sales to face pressure, but believe we can still grow revenue and maintain profitability,” Yang said.

The comments underscore the strain on PC manufacturers as memory-chip shortages, driven by AI demand, squeeze margins and threaten production targets.

Lenovo’s third-quarter revenue rose 18% to US$22.2-billion, beating expectations of $20.6-billion, but net profit fell 21% to $546-million, weighed down by a $285-million restructuring charge.

The restructuring aims to sharpen the company’s focus on the AI inference market and will cut costs by up to $200-million over three years, CEO Yang said.

Adjusted net profit, which excludes one-time items and non-cash charges, climbed 36% to $589-million.

AI focus

Lenovo’s PC, tablet and smartphone business line, which accounted for about 70% of its total revenue, reported a 14.3% revenue increase for the period. Its digital infrastructure group, which includes its AI server business, grew 31% despite reporting an operating loss of $11-million due to an investment to scale up its AI capabilities.

Lenovo’s AI server business posted high-double-digit revenue growth, driven by a strong pipeline and deployment of rack-scale solutions based on Nvidia’s GB200 NVL72 design.

Read: Smartphone market hit by deepening memory crisis

Yang said AI demand is shifting to inference from training, prompting Lenovo to adjust its server portfolio to target the AI infrastructure market, which it expects to triple by 2028.

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