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Lixi Yuan: Good morning, good afternoon and good evening. Welcome to Lenovo's Earnings Investor Webcast. This is Lixi Yuan, Director of Investor Relations at Lenovo. Thanks, everyone, for joining us. Before we start, let me introduce our management team joining the call today. Yuanqing Yang, Lenovo's Chairman and CEO; Winston Cheng, Group CFO; Luca Rossi, President of Intelligent Devices Group; Ashley Gorakhpurwalla, President of Infrastructure Solutions Group; Ken Wong, President of Solutions and Services Group; and Sergio Buniac, Senior VP of Mobile Business Group and President of Motorola. We will begin with earnings presentations. And after that, we'll open the call for questions. Now let me turn it over to Yuanqing. Yuanqing, please.
Yang Yuanqing: Hello, everyone, and thank you for joining us today. I'm pleased to share that Lenovo achieved extraordinary results last quarter, delivering on every commitment we met. This once again proves that Lenovo not only navigated the market cycle with operational excellence, but also seized the growth opportunities through innovation. We are confident we can further build on this momentum to lead in hybrid AI and drive sustainable growth. Now let's start at the group level. Last quarter, we delivered on our promise of double-digit growth with sustained profitability in the second half of the fiscal year. Our group revenue reached an all-time high of USD 22 billion, grew over 18% year-on-year with double-digit growth across all business groups. Our adjusted net income expanded 36% year-on-year, doubling the pace of revenue growth. AI is becoming a leading growth engine as AI-related revenue surged more than 70% year-on-year, now representing nearly 1/3 of the group total. Our IDG or Intelligent Devices Group delivered exceptional performance with revenue growing 14% year-on-year to almost USD 16 billion, while maintaining industry-leading profitability. Despite the industry-wide component supply shortages and rising costs, our PC and smart devices business enhanced its competitiveness even further. Its revenue sustained rapid growth at 17% and PC volume growth outpaced the market for 10 consecutive quarters. Our PC market share for the 2025 calendar year was the highest in history. For our mobile business, we achieved both record volume and record activations for mobile business. Our ISG or Infrastructure Solutions Group continued its hyper growth, delivering record revenue of USD 5.2 billion, up more than 30% year-on-year, steadily moving the business closer to profitable growth. Just as I shared last quarter, the infrastructure market is undergoing an important shift from AI training on public cloud to AI inferencing, increasingly happening on-prem and at the edge for enterprises. To better capture this trend, we carried out a strategic restructuring. This initiative is designed to boost the productivity by optimizing our cost structure, address market opportunities by refining our product portfolio and enhance competitiveness by optimizing our business models and upgrading our sales force. The restructuring is expected to deliver more than USD 200 million annualized net savings in the next 3 years and put ISG on a solid path of sustainable and profitable growth. SSG, our Solutions and Services Group achieved over 22% operating margin at 18% year-on-year revenue growth with accelerated growth in focused vertical industries, including manufacturing, retail, sports, transportation and smart cities. Looking ahead, we firmly believe in the trend of AI democratization. As AI becomes deeply integrated into individuals' daily lives and enterprise operations, it's far from a bubble, but a technological advancement that delivers tangible value. Lenovo will continue driving hybrid AI through personal AI and enterprise AI to capture the significant growth opportunities here. This is not just a vision. We are already delivering significant outcome for customers. This January, we successfully held the Lenovo Tech World at CES, showcasing the progress in hybrid AI as well as announcing breakthrough innovations and products. In personal AI, we introduced our AI super agent, Lenovo Qira to the global market, along with a series of innovative AI devices. In enterprise AI, within the framework of Lenovo Hybrid AI advantage, we shared how we bring AI inferencing closer to where data is generated on-prem and at the edge. We also launched xIQ platforms and announced AI Cloud Gigafactory in partnership with NVIDIA. We will start shipping Qira embedded devices as soon as the next quarter. So stay tuned for more updates. While leveraging innovation to drive growth, we will also continue leveraging operational excellence to navigate market cycles and come out even stronger. With our scale, resilient global supply chain and strong partnerships, we have proven we can outperform the market again and again during the pandemic, trade tariffs and more recently component cost increase and supply shortage. In each cycle, we have consistently secured components, gained market share and improved the profitability. Looking ahead, no matter how the market changes, Lenovo is fully prepared to drive continuous revenue growth and profitability enhancement with even greater resilience and stronger execution. In closing, I'd like to share we do what we say, we own what we do. This is Lenovo culture. Last quarter, we delivered on our promise and achieved outstanding results on all fronts. Lenovo has entered an accelerated era of growth and profitability, reaching a whole new level of innovation and operational excellence. I have every confidence in our ability to deliver substantial returns to our shareholders and bring smarter AI to all. Thank you. Now let me turn it over to our CFO, Winston. Winston, please.
Shao-Min Cheng: Thank you, Yuanqing, and a good day, good afternoon and good evening, everyone. I'm pleased to walk you through Lenovo's results for the third quarter of fiscal year '25-'26, a quarter that delivered record revenues, accelerating profitability and continued AI revenue expansion. We delivered record high fiscal quarter revenue of $22.2 billion, up 18% year-on-year with double-digit year-on-year revenue growth across all business groups. Despite a year of tariffs and component supply-demand imbalances, Lenovo continues to demonstrate resilience. In the third fiscal quarter, our strong top line growth was driven by expanding market leadership in PCSD, record volume in activation and smartphones and all-time high revenues from both ISG and SSG. AI is a multiyear growth engine for Lenovo, underpinned by our unmatched scale, diversified global portfolio and continued investment in innovation. Our AI-related revenue grew 72% year-on-year and now represent 32% of total group revenue, driven by strong demand across AI devices, infrastructure, services and solutions. Adjusted operating income was $903 million, an increase of 28% year-on-year, demonstrating operating leverage, efficiency gains and a higher revenue contribution from premium offerings. Adjusted net income grew to $589 million, while adjusted net margin expanded to 2.7%. Excluding onetime gains and charges for third quarter fiscal '24-'25 and third quarter fiscal '25-'26, on an operating basis, adjusted net income for the quarter increased by 36% year-on-year, doubling with growth of revenues. Key exclusions from adjusted operating and net income include a $285 million onetime restructuring charge relating to ISG and enterprise sales, a $186 million noncash fair value gain on warrants and $29 million notional interest mainly from zero coupon convertible bonds related to our strategic partnership with PIF, Alat. Now let me walk you through the key highlights of our business groups. IDG delivered another exceptional quarter, strengthening Lenovo's position as the world's PC leader with continued market share gain. We expanded our global PC market share to 25.3%, up 1 percentage point year-on-year, extending our lead over our closest competitor by 5 percentage points and marking our second consecutive quarter as the only vendor to surpass 25% global PC market share since IDC data became available. Despite supply shortages and component cost pressures, PCSD delivered double-digit revenue growth year-on-year and stable operating margin driven by operational excellence and continued innovation. AI PC momentum continued to accelerate with revenue growing at high double digits year-on-year. Non-PC adjacencies also posted strong double-digit growth with a clear margin uplift. On the mobile side, our Motorola business also delivered a record quarter. Volume and activation reached an all-time high growth across major sales geographies. At Tech World at CES, we expanded our AI native device portfolio with some of our most innovative product launches yet. We introduced the new Aura lineup, including the latest ThinkPad X1 2-in-1 and Yoga Pro 9i , bringing next-gen personalized AI features to our flagship premium notebooks. We also debuted the ThinkBook Plus Gen 7 Auto Twist, featuring an adaptive motorized dual rotation hinge designed to seamlessly ship between work and presentation modes. In desktops, our new ThinkCentre X Series delivers modern AI-ready performance complete with a dual screen setup for connected content creation. And in mobile, Motorola unveiled the Moto Signature, our new ultra-premium franchise and first thinnest smartphone in its class and the Moto Razr Fold, the first book-style foldable featuring an expansive display and advanced AI capabilities. Together, these launches demonstrate how Lenovo is redefining the future of hybrid AI across PCs, desktops and smartphones. At Tech World CES 2026, we also unveiled Qira, a cross-device AI super agent that brings our one personal AI multiple devices vision to life. Qira is unified entry point for LLMs to engage directly with end users and serves as the intelligence layer across the Lenovo ecosystem. It is a user's personal assistant and AI Twin across devices capable of executing tasks using both on-device and cloud AI and continuously learning from user context while maintaining privacy by design. With Qira at the center of our end-to-end super agent ecosystem, we're elevating device value, deepening our integration with partners and developers and expanding opportunities for services and subscription models. Together, Qira and our hybrid AI architecture enable a seamless unified intelligent experience that strengthens our competitive advantage across both personal and enterprise AI. Moving on to ISG. ISG delivered a record quarter, generating revenue of $5.2 billion, up 31% year-on-year. We saw strong momentum across the business driven by record CSP revenue from an expanding customer base, enterprise and SMB transformation and accelerated AI server momentum. Operating performance improved sequentially. Our AI Server business achieved high double-digit revenue growth with a robust $15.5 billion pipeline. We also deployed the first Lenovo GB300 NVL72 base rack scale solution, marking a significant milestone in next-generation AI infrastructure. Our Neptune liquid cooling revenue grew 300% year-on-year, supported by higher customer adoption across CSP, enterprise and SMB businesses. We announced a onetime restructuring program this quarter in ISG, which we believe is a crucial step to realigning the cost structure and accelerating the transformation towards a sustained improved profitability in the business. Through cost structure realignment and operating model optimization, we are investing in our highest priority growth areas and positioning ourselves to capture the enterprise AI wave. ISG transformation program provides a clear path to profitability as early as next quarter and is targeted to achieve over $200 million annual run rate net savings over the next 3 years. By scaling customer value, innovation and driving One Lenovo execution, we're well prepared to capitalize on expanding opportunities. Our high-velocity transaction model simplifies the engagement, deployment and maintenance experience for our customers and partners. These initiatives will boost sales efficiency and accelerate time to market, unlocking customer acquisition and positioning us favorably to capture multiyear CSP training and ESMB inferencing tailwinds. Our AI infrastructure portfolio continues to differentiate Lenovo across every major segment of the market. In CSP, our strategic collaboration with NVIDIA on the AI Cloud Gigafactory positions us at the forefront of hyperscale AI deployments. In enterprise and SMB, we expanded our AI inferencing portfolio with newly launched servers and solutions designed for various workloads, enabling enterprise customers to achieve accelerated deployment and scalability. In high-performance computing and AI, our Neptune liquid cooling technology continues to set the industry benchmark. Processor level warm water cooling, for example, now enables reliable live Formula 1 broadcasts. SSG delivered a record revenue quarter, growing 18% year-on-year, marking the 19th consecutive quarter of double-digit year-on-year growth. Operating margin reached 22.5% near historical high. Revenue mix continued to shift toward high-growth areas this quarter. Managed Services and Project & Solutions together grew to 59.9% of SSG revenue. By enabling faster deployment and offering greater cost predictability, TruScale Device as a Service and Infrastructure as a Service saw accelerated growth this quarter, driven by GPU and AI workloads. Our AI-enabled services, which have reduced cloud cost by more than 70% for Shiseido and enable 98% on-time delivery for Yili are driving measurable outcomes for leading global organization that trust Lenovo to support their strategic AI initiatives. Our hybrid AI advantage, which powers iChain, Lenovo's AI-driven supply chain orchestration platform and Football AI Pro, the FIFA co-developed AI knowledge assistant that delivers real-time performance analytics continues to accelerate enterprise AI at scale, enabling the creation of next-generation super agents. SSG is strategically positioned in the fastest-growing areas in the IT services industry, capturing a total addressable market of $360 billion and levered to the growing opportunities in Managed Services and Project & Solutions. In areas such as digital workplace services, hybrid cloud, AI and sustainability, SSG is growing at double the rate of market growth. These offerings allow us to scale the revenue at 4-year CAGR of 23.9%, enabled by our differentiated technological expertise, long-term engagement models and strength of our hybrid AI advantage. At Tech World at CES, we announced the next phase of our hybrid AI advantage with the launch of Lenovo Agentic AI, a new full life cycle enterprise solution for creating, deploying and managing AI agents and Lenovo xIQ, a new suite of AI-native delivery platforms designed to simplify and accelerate AI across the enterprise. Lenovo Agentic AI and xIQ seamlessly extend our solutions and services portfolio strengthening our role as the execution engine to enable organizations to rapidly move from strategy to deployment. Before concluding, I want to highlight our success at Tech World at CES 2026. Lenovo won a record number of over 200 awards, including 3 of the prestigious CTA Official Best of CES 2026 Awards. With 14,000 attendees at the Sphere in Las Vegas and millions more viewing online, we brought together key industry partners such as Intel, AMD, NVIDIA, Qualcomm, Microsoft, FIFA and of course, the Sphere. This showcased the industry's broadest product portfolio at scale and our latest innovations for the global AI ecosystem, reinforcing our leadership in innovation and our unwavering commitment to hybrid AI. Along our success at CES, we continue to advance our sustainability agenda. We received a Global Lighthouse Network Award from the World Economic Forum with our Mexico manufacturing site added as our second lighthouse, a clear recognition of how we are applying the innovation to strengthen our resilience, boost efficiency and reduce environmental impact. Looking ahead, our strategy remains sharply focused and highly disciplined. With our global scale and proven operational excellence, we continue to execute reliably and outperform even in volatile markets. As we enter an accelerated era of growth with improved profitability, our hybrid AI strategy positions us to drive sustained profitable growth for our stakeholders with even greater resilience and executional strength.
Lixi Yuan: Thank you, Winston. Now we will open the floor for questions, and this session will be English only. [Operator Instructions] While we're waiting for the questions, allow me to introduce the management team again. Other than our Chairman, Yuanqing Yang; and CFO, Winston Cheng, we also have the following business leaders with us today for Q&A. Luca Rossi, President of Intelligent Devices Group; Ashley Gorakhpurwalla, President of our Infrastructure Solutions Group; Ken Wong, President of our Solutions and Services Group; and Sergio Buniac, Senior VP of Mobile Business Group and President of Motorola.
Lixi Yuan: We'll begin the Q&A session by addressing several frequently asked questions leading up to the earnings, which we believe are especially relevant to this quarter's performance. So the first question, at Lenovo's 2026 Tech World during CES in January, we witnessed the successful launch of new products and services. As Lenovo continues to enhance its global brand and demonstrate its position as global tech leader, what do you see as the most significant opportunities in AI? How is Lenovo strategically positioned to capture these opportunities? For this question, may I please invite our Chairman and CEO, Yuanqing, to address it. Yuanqing, please?
Yang Yuanqing: Thank you. So this January, we successfully held Lenovo Tech World at CES comprehensively showcasing our plan and progress in hybrid AI, including personal AI as well as enterprise AI. In personal AI, we introduced our AI super agent, Lenovo Qira to the global market, along with a series of innovative AI devices. So we will start shipping Qira embedded devices as soon as next quarter. So stay tuned for more updates. In enterprise AI within the framework of Lenovo hybrid AI advantage, we demonstrated how AI inferencing is brought closer to where data is generated on-prem and at the edge. We also launched xIQ platforms and announced the AI Cloud Gigafactory in partnership with NVIDIA. In fact, so market continues to question whether AI is overheating. But in my view, there may be a bit more investment in certain areas, for example, frontier models, pretraining and pursue AGI. So these are worth exploring, but not necessarily the only right path forward. However, looking at the AI as a whole, it's fundamentally a data technology, the technology that fully leverage all forms of data accumulated throughout the human history to generate the intelligence. And that is absolutely not a bubble, but a technological advancement that delivers tangible value. So looking ahead, we firmly believe AI democratization is irreversible and unstoppable trend, but it will shift from public AI and cloud to AI inferencing increasingly happening on-prem and at the edge and more enterprise AI use cases vertically or horizontally. So Lenovo has developed and implemented this hybrid AI strategy through the dual engine of personal AI and enterprise AI to capture the significant growth opportunity brought by AI democratization. So this is not just a long-term vision, but also a strategy we are executing with a full commitment. So you can see the number from our last quarter results. So our AI-related revenue grew more than 70%. Now it has already accounted for 1/3 of our total revenue. So we will continue that pace. Thank you.
Lixi Yuan: Thank you, Yuanqing. The next question is on the component cost increases. So with the rising memory costs impacting the entire hardware industry, how is Lenovo preparing to navigate this challenge? Looking ahead to the next financial year, how should we evaluate the market demand in the context of increasing component cost? For this question, may I please also invite Chairman, Yuanqing, to give your answers. Yuanqing, please.
Yang Yuanqing: Yes. So definitely, the supply shortage and rising cost situation is precedented and still not finished. The DRAM cost increased by 50% last quarter, but the current quarter versus last quarter almost doubled again even with the contract price. So this structural imbalance between supply and demand is not simply a short-term fluctuation. It's likely to have a prolonged impact on the industry throughout this year. So we are closely monitoring the situation and taking agile action as necessary. But on the other hand, a volatile market could become an opportunity for Lenovo. As I always said, we have already proven ourselves many times. So you should remember when tariff hit about a year ago, so we were quite concerned or you are quite concerned and expecting us to be heavily impacted. But instead, by leveraging our operational excellence and our global local model, so we not only navigated that highly volatile period smoothly, but even further expanded our market share with improved profitability. Also, you can see from our last quarter's result, we actually effectively mitigated this impact through a lot of approaches, broad sourcing capability, diversified sourcing strategy, flexible and resilient supply chain and long-standing trusted relationship with suppliers to ensure consistent component supply at a competitive cost. Looking ahead, so high material cost will probably constrain the demand for PC smartphone. But that's just from a unit volume point of view. But given the higher pricing and the market shifting to the premier segment because of AI PC, AI phone. So we believe the overall PC revenue market will still grow year-over-year for sure, because our strong supply chain and resilience. So we also -- we are confident to continue to drive the premier to the market. So definitely, we cannot avoid the impact of the market cycles, but we can ensure stronger competitiveness. So actually, we are still confident to deliver double-digit growth in our PC as well as infrastructure business in the next couple of quarters. Thank you.
Lixi Yuan: Thank you, Yuanqing. Thank you very much. So we'll move on to the questions that we've just collected from analysts. The next question is from Cherry Ma from Macquarie. What is the outlook for PC and smartphone for the market and for Lenovo in 2026 in terms of shipment volumes, margins and ASPs? So may I please invite Luca and perhaps followed by Sergio to address the question on PC and smartphone, respectively. Luca, please.
Luca Rossi: Yes. Can you hear me okay?
Lixi Yuan: Yes, clear. Thank you, Luca.
Luca Rossi: So thank you for the question, Cherry. And I think there are multiple questions within one question. So I'll try to address them step by step. So let me start with the market. So given the inflationary cost environment, we think the market will see some decline year-over-year. At the moment, we are modeling a mid-single-digit decline for the units. But that decline will be offset by a higher ASP and likely a favorable product mix. Hence, the value of the market will not decline. For Lenovo, we will continue to grow at premium to market. It's something we did in the last 10 consecutive quarters. We see opportunities with the end of service of Windows 10. There is still a significant portion of units to be upgraded. We estimate more than $100 million. AI PC refresh, a large base of devices that are now 4, 5 and even 6 years old. So with that, we are confident we will navigate this inflationary environment and this shortage supply dynamic better than our peers with large-scale procurement, our long-term strategic partnership with the key players in the industry and of course, with our innovation capabilities. Let me emphasize that our growth in shipments and premium to market is not just in shipment. We are also winning in activations. Our channel inventory is very healthy and our sellout is very strong. So that to talk about the market. Regarding the average selling price, ASP or AUR, we expect it to go up in 2026. We will see how this plays out. Some customers might prefer to scale down the configuration. Other customers will just accept the price increase. At the moment, we are modeling something in the mid-single-digit growth in average, and we will continue to track quarter-by-quarter. Now last but definitely not least, regarding our margins, as we mentioned, it will be an inflationary environment, particularly driven by memory, DRAM and NAND. There will be also certain platform cost up due to silicon cost. This situation, I will say, is not new to Lenovo. We have demonstrated many times that we are able to challenge -- to navigate those challenging environments. We are able to mitigate cost, manage prices and at the end, maintain the strong profitability with market share gains. So I think we are confident we will navigate in the next few quarters in a sustainable way. We will continue to deliver industry-leading profitability. We will continue to win in the market. And let me close in this way. At the core of all of this, it remains innovation and operational excellence as the foundation of our success. With that, I'll pass to Sergio.
Sergio Buniac: So I mean, very similar to the PC, we expect a high single-digit decline for the mobile market. We also are seeing 10 quarters of premium to market. Last quarter, not only we saw premium to market, but we saw premature market in every geography. We expect the premature market to continue in the moving quarters. And while units decline, revenue expected to go up, there are, I think, besides the adjustment on the commodity cost, we are moving further ahead to premium in our mix. We just launched at CES, our new signature ultra-premium franchise. We just announced a new Razr Fold. So I mean, we believe we will sustain a premium to market in all yields, revenue price adjustments that we need to manage, but also a significant improvement in mix as we move in the new launches that start in the next 2 months.
Lixi Yuan: Thank you, Sergio. We move on to the next question is on ISG. So it's from Leping from Huatai Securities. Congratulations on the strong performance of ISG this quarter. We saw a shift of AI demand from training to inference. With the restructuring plan announced this quarter, how is the company strategically positioned its product portfolio to capture the fast-growing AI inference market? What is the rationale behind the ISG restructuring plan? And how do you envision ISG's growth trajectory and profitability in the coming years as a result of the plan. I'll probably invite Yuanqing to address this question first and then followed by Ashley to give more granularity. Yuanqing, please.
Yang Yuanqing: Okay. So just I shared at the beginning, the infrastructure market is undergoing an important shift from AI training on public cloud to AI inferencing increasingly happening on-prem and at the edge for enterprises. Thus, I would say, the restructuring we just made is more of a transformation towards the new trend of bringing AI inferencing closer to end users. So we are making agile, fast and decisive moves to build new capabilities and to boost the efficiency and productivity by simplifying our traditional compute portfolio, meanwhile, address market opportunities by strengthening AI-related product portfolio, particularly AI inferencing product portfolio. So meanwhile, we are enhancing competitiveness by optimizing our business model for SMB and large enterprise relationship customers, respectively. We are also upgrading our sales force to meet the huge demand. So with this focus and transformation, we are narrowing the loss every quarter with our ISG business. And now we are on track to turn around this business as early as in the current quarter at a onetime cost of -- we booked $285 million restructuring cost last quarter, but we expect to deliver more than $200 million annualized savings over the next 3 years. So we are very confident and have a strong conviction that with this clear strategic move, our ISG business will start the sustainable and profitable growth and deliver improving performance going forward. So probably, Ashley, you can add more color.
Ashley Gorakhpurwalla: Thank you, YY, and thank you for the question. It's hard to add more than our Chairman just added. He said it quite well. But maybe to be repetitive and add a little bit more. We all agree we're at an extremely important inflection point. And as YY and Winston both mentioned earlier, it's not quite certain if we are in the very beginning, early beginning middle. And I think we all know that as we look backwards, maybe 5 years out, we'll know the answer to that, but it's very clear with our customers and our partners that the era of AI inferencing and adoption into the -- into production and usage is just beginning, but it is beginning very quickly. That's why it is a clear inflection point and an opportunity for us to take very decisive action, not just to transform, but to accelerate the transformation to bring it in, to make it happen faster. And that's the very important part of the why. We're focused on investing in targeted investments for enterprise AI era. And that's going to include optimizing our end-to-end transactional model. The faster, more agile methodology of the operating model allows our customers to also adopt their AI into their systems more iteratively, faster, quicker with better agility as well on their side. We simplify our portfolio to focus on digital transformation and AI adoption solutions. And as YY mentioned, we're increasing our go-to-market AI skill sets to really help partners, customers on their AI journeys as well as a trusted technology provider to them. We believe these actions will increase speed, improve our agility and enable increased leverage from our operating model. I believe part of the question was why now? It's because we're certain and committed to leading in the AI era of AI democratization. Because we're only at the beginning stages, the opportunity to lead is right now. This onetime restructuring allows us to accelerate that transformation and the confidence is actually quite high in our stated goals of saving $200 million on an annualized basis over the next 3 years because we aren't just starting. We've been hard at work on the transformation project throughout calendar year 2025, and we get to see the significant progress on our internal indicators of increased AI productivity, portfolio optimization, increasing velocity on our operating model and increased sales capability. Thank you.
Lixi Yuan: Thank you, Yuanqing. Thank you, Ashley. We're going to move on to next question, which is from Howard from Morgan Stanley. So aside from memory, which other components are you seeing pricing increases? And how would this impact IDG's margins over the next few quarters? Any strategy in place to address the potential issues? So for that, I please invite Luca to address this question, please.
Luca Rossi: Sure. Thanks, Howard. So regarding other components, so I will say the cost increases are largely in the memory space. There are also additional cost up in the silicon or in the silicon area, given the demand and supply imbalance, particularly in certain manufacturing nodes. The rest of commodities of building PC or a phone, I will say, are largely stable and maybe there are even some opportunities for cost down in certain other areas. Now protect our margins is definitely one of our key objectives. And that is achieved through a combination of actions. You can think about product innovation, design to cost innovation, expanding our supplier base, making long-term strategic purchases, of course, dynamic pricing. At the end, you still have a market to face and then pricing, I believe, will go up, tight expense management and definitely our laser precision in operations. Maybe it's also in the area of how to expand and protect our GP. We are also focusing and accelerating on what we call non-PC revenues. So all the adjacencies to PC services, accessories, these are all margin-rich and all areas where we have still a significant room to grow. So that will be part of the several actions that we are driving to navigate and to make sure we can protect our margin and our profitability. Thank you.
Lixi Yuan: Thank you, Luca. Great. Next question is also from Howard Kao from Morgan Stanley, and this is on ISG. So could you please remind us the breakdown between AI server, general server for cloud and enterprise server within ISG? And can you help to give some color on the outlook for these 3 end segments for Lenovo this year? So Ashley, please.
Ashley Gorakhpurwalla: Sure. Thank you for the question. We don't have a breakout of those segmentations. As we've said before, our AI server growth is quite significant, outpacing our general growth. So the mix is shifting towards AI server growth as we expected it would. For us, perhaps to give a little color on the market and outlook. If you take the bold statement that the market is effectively sold out from a high-value component perspective for, let's say, a quarter, 2 quarters, 3 quarters, then you'll see, as we've discussed earlier, that we'll see increasing costs from CPU flash, DRAM and other components going forward. And so infrastructure providers like Lenovo will be focused on efficiency, productivity, scale in order to minimize pass-through impacts to our end customers, but there will be increasing costs throughout 2026. In the CSP space, we're likely to maintain or increase infrastructure CapEx spending. We don't actually see that being deflected by the increasing costs. We expect AI training and related DC spend to stay at double -- high double-digit year-over-year growth. For your question of CSP general versus AI, we're actually seeing that highly correlated. AI growth for training or frontier may be slightly different. But in general, what we're seeing is any growth related to AI increasingly is growing across data, compute elements in the cloud as well for our service providers. And we think our strategy there of having our own world-class manufacturing gives us an edge and a differentiation in efficiency and productivity because we can serve these at-scale customers with our scale. And in a supply-constrained environment, we think other factors, and we know other factors will be prioritized like speed to deployment. Lenovo's already deployed, for instance, GB300 rack-scale infrastructure. And we just announced our joint effort that's been underway with NVIDIA called Lenovo NVIDIA AI Cloud Gigafactory. And this helps speed up our customers' time to first token, which is very important in an inflationary environment. In the enterprise space, we see that it's likely that CIOs, business leaders will be facing this challenge of increasing costs within their technology business, but also while driving AI adoption to help offset that with productivity. Lenovo is going to help by prioritizing AI productivity business value projects and really focused on production deployments. Of the surveyed CIOs that we talk to, 93% are expecting a positive ROI from their AI deployments. This gets more difficult with the cost environment. And that's why, for instance, at Tech World, we've talked about not only being focused on delivering rack-scale solutions with NVIDIA and AMD, but that we're already leading the industry in enterprise AI inference solutions across a portfolio optimized for compute storage and software. A great example for me is the ThinkSystem SR650i. It's already set many inference benchmark world records. Now 84% of those CIOs have to leverage hybrid AI capabilities because they have to have the workload where the data is relevant. And that's why we've also announced our Lenovo Hybrid AI Advantage program. That can span from private cloud economics like TruScale, which is becoming increasingly more important in this environment to industries that need reliable edge inferencing platforms like our SE455i. So I think -- when it comes to the enterprise side, we see the market very similar to as Luca discussed earlier, where perhaps there is downward pressure on units, but increasingly offset -- more than offset by richness of each unit and content. And so that becomes important because Lenovo differentiates our supply chain, our world-class reliability and our energy-efficient IP like Neptune will come together and help build that better ROI outcome for the customer despite the inflationary cost. So we believe that our differentiation in AI operations, high-performance systems delivered with extreme efficiency is going to be even more aligned to helping our future customers. Thank you.
Lixi Yuan: Thank you, Ashley. The next question is from Cherry Ma from Macquarie. For SSG, what's our customers' IT OpEx versus CapEx spending trends? And what's the implication of our growth outlook this year? This question is for SSG. I would like to invite our SSG President, Ken Wong, to answer the question. Thank you.
Kin Hang Wong: Thank you, Cherry, for the question. Well, we definitely see an increasing trend of OpEx versus CapEx, probably at the rate of 2x that of CapEx. I think one of the reason is being, for example, our TruScale as a service across our devices and infrastructure one of the value proposition that resonate a lot with our customer, especially during the period of component price volatility is about predictability, right? And also our xIQ platform helped to optimize the compute and persona and make sure customers get the most out of their infrastructure and device investment. And from a Lenovo perspective, right, if we were able to get into a TruScale as-a-service engagement, there are a couple of benefits. One is when we look at the historical data, our retention rate for TruScale as a Service is usually more higher than 90%. So a very, very high retention rate compared to a CapEx motion. The other thing is once we get into a contract, we're able to understand the customer better, understand the opportunity and as well as the challenges. And hence, that give us more opportunity to serve the customer on a broader basis. Last but not the least, right, such a contract is a multiyear contract and also with a scope way beyond the hardware scope, for example, include software and services, and that always result in a higher profitability for the company, right? So in a nutshell, I think we're still very positive about the pace of growth for our TruScale business for the reason that I shared. So thank you.
Lixi Yuan: Thank you, Ken. The next question is from Tony Zhang from CLSA. How is AI reshaping the SSG business compared with the pre-AI era? What has adoption been like for your AI-enabled vertical solutions? And how are they ramping as they address customer business challenges? So this question is also for Ken from SSG. Ken, over to you, please.
Kin Hang Wong: Thank you, Tony. Well, a big question. So a couple of things, right? When I look at the customer requirement in the past probably 6 months compared to before, there are 2 main changes. One is from Gen AI to Agentic AI, right? Agentic AI is about resolving not just one problem, but a complex problem with a lot of steps, things like that, right? So that will be one change. The other change is very obvious is customers are no longer looking for proof-of-concept kind of project, right? They're looking for production -- real production and with impactful and meaningful outcomes. So those are the 2 changes. And as a result, I think our hybrid AI advantage, which is a comprehensive framework and offerings across compute, data, platform use cases and consulting services are really able to help our customer to adopt Agentic AI at scale. A couple of examples. I think one is we successfully helped one of the world's leading dairy company to use Agentic solution to improve their supply chain operation efficiency by 20%. The other example is we worked with a Global 500 technology company to help to use Gen AI to modernize their customer service centers around the world. And again, this is by Agentic solution, which is a team of agents all with different roles and responsibility to achieve complex task. And with that, we were able to help this customer to improve the efficiency by 20% and also significant uplift in terms of customer satisfaction, right? So we continue to see the trend in terms of -- from POC to real production from Gen AI to Agentic AI. And I think Lenovo Hybrid AI Advantage is perfectly fit for this kind of requirement in the market. Thank you.
Lixi Yuan: Thank you, Ken. Conscious of the time, we'll take one more question. The last question is from Jordan Pong from Franklin Templeton. Is there any update on the collaboration with Alat? What is the progress on the expansion in Middle East? So this question, I would like to invite our Group CFO, Winston, to address. Winston, please. So given the time, I think Winston is moving on to the next interview session. So this will be the end of this earnings webcast. And thanks to everyone for joining. Thank you.
Unknown Executive: [indiscernible] answer your question.
Shao-Min Cheng: I was in the middle of answering. Is it over?
Lixi Yuan: Please go ahead, Winston. Yes, we can hear you.
Shao-Min Cheng: Yes. So the strategic investment, clearly very important. We're aligned. You can see the news. The Middle East continues to be very much investing in AI as part of our initiative. You can see our ISG business is very much aligned to this trend, particularly on global infrastructure spend. So very much aligned to capture this opportunity. Our plant is well on track. In fact, and started manufacturing. We'll have a grand opening of our office in our whole effort there in a few months' time, which will -- you'll see the news. And also, if you would like to attend in person, I think we'll be very open to have investors there as well. So for you to see in person. So absolutely. Thank you for your question.
Lixi Yuan: Thank you once again. Thank you, everyone, for joining. This will be the last question and end of this earnings webcast. Thank you. Goodbye.