[Foreign language] 2023/2024[Foreign language] CEO。[Foreign language]，CFO。Ken Wong， [Foreign language] ，SSG [Foreign language] ， [Foreign language] 。Kirk Skaugen， [Foreign language] ，ISG [Foreign language] 。Luca Rossi， [Foreign language] ，IDG [Foreign language] ， [Foreign language] Sergio Buniac， [Foreign language] ，MBG [Foreign language] 。 [Foreign language] ， [Foreign language] ， [Foreign language] CFO [Foreign language] 。
[Foreign language] 45% [Foreign language] SSG [Foreign language] SSG [Foreign language] SSG [Foreign language] 55%。 [Foreign language] 。
...ISG, we achieve double-digit year-on-year revenue growth. As we focused in the last quarter, while profitability was still under pressure, we achieved the hyper growth of storage, software and services businesses. The combined revenue of which increased more than 50%, 50% year-on-year. Looking ahead, AI servers are expected to grow twice as fast as the broad server market. At Lenovo, we will capture these growth opportunities by building our broad portfolio and converting our extensive pipeline to revenue. By leveraging our strength, we will also capture steady growth opportunities in traditional service, storage, software and services. And we have a solid plan in place to drive the business return to profitability shortly. Our Intelligent Devices Group, or IDG, continued to deliver a solid quarter for PC.
We strengthened our global market leadership with a significant premium to the market, while maintaining industry-leading profitability... We were number one in four out of five geographies, and achieved a record-high market share in North America as well. Our smartphone business delivered another remarkable quarter, with double-digit growth in shipment and revenue, with a substantial premium to the market. Looking ahead, we expect the total volume of the PC market to recover to higher than pre-COVID levels. With the smartphone market already returning to double-digit year-on-year hypergrowth. Lenovo is provided with ample room for growth. We are particularly excited about the huge growth opportunities brought by AI devices, starting from AI PC, which is, in our definition, are equipped with personal AI agent with natural language interface, heterogeneous computing, including CPU, GPU, NPU.
And also, we can help users to build themselves personal knowledge base. And they should be connected to our open AI application ecosystem. And the last but not least, so we will have strict privacy and security protection mechanism. We expect in the next three years, AI PC will gradually grow from premium to mainstream segment, driving a new refresh cycle in the PC market. We strongly believe most consumers of PC, the next PC, will be AI PC. Or we should say, AI PC will drive next round of the PC replacement. We are also gradually expanding from AI PC to AI, to AI phone and AI tablet, while building seamless collaboration among devices.
Last month, we announced a new partnership with Meta in mixed reality, and we expect the most such collaborations to come. Lastly, let me also briefly cover our full-year performance. First, with the various headwinds in the macro environment, group revenue and profit declined year-on-year. But if we take a closer look, starting from the third quarter, we have already achieved a year-on-year revenue growth and begun to recover net margin from a year-on-year decline in the first half to flat in the second half of the fiscal year. Last year, we increased our R&D investment, focusing on our anchor technologies of AI and computing. Our R&D expense to revenue ratio, R&D headcount, and as a percentage, all achieved record highs. Our SSG delivered solid revenue growth and a higher more than 20% operating margin.
For ISG, while we saw full-year revenue decline year-over-year, we achieved the quarter-to-quarter growth for three consecutive quarters. Our IDG overcome the challenges of a weaker-than-expected market and delivered a resilient profitability. Our PC, tablet, and smartphones businesses all successfully resumed growth for the second half of the fiscal year. Entering the new fiscal year, we are determined to leverage the unprecedented opportunities of hybrid AI to accelerate the growth of our 3 S businesses. Supported by our continued investment in innovation, full-stack portfolio, resilient operations, and ecosystem partnerships, we have full confidence in our ability to deliver sustainable growth and profitability improvement. Thank you. Now let me turn it over to our CFO, Wai Ming. Wai Ming, please.
Thank you, Yuanqing. Uh, good afternoon, everybody. Now, I will now take you through Lenovo financial and operational performance for our quarter four in fiscal year 2024. In quarter four, the group benefited from better-than-expected demand and achieved several new milestones. Group revenue grew by 9.5%, and net profit more than doubled, boosted by consistent strength across all three business groups. Despite the setback in business performance in early part of the year, the group doubled down on its investment in hybrid AI to unlock growth opportunities while boosting its profitability. Gross margin reached its second-highest level in the fourth fiscal quarter at 17.6%. The non-PC business made up a record high of nearly 45% of the combined revenue of the three business groups, showcasing our success in building a diversified growth engines....
SSG delivered its record fourth quarter revenue and boosted a 20% year-over-year profit growth. IDG segment profit increased by 17% year-over-year, fueled by operational excellence and profitable and fast-growing premium segments. ISG regained strong revenue momentum, delivering a 15% year-over-year increase, thanks to a strong recovery in cloud customer demand and expanded general AI portfolio, and record sales across storage, software, and services. ISG profitability was stunted by market transition, but timely initiatives are in place to drive future improvements. The group recorded a one-time non-cash accounting gain of $143 million from a fair value assessment of a put option liability. This gain was largely offset by restructuring and other charges totaling $132 million. Those charges resulted from various measures to further enhance the group's efficiency, and competitiveness.
For the fiscal year 2024, the group successfully navigated through a dynamic market environment, marked by shifting demand and technology trends. The challenges experienced in the first half year weighed heavily on the group's full year's number, resulting in an 8% decline in revenue and a 37% decline in profit attributable to equity holders. Nevertheless, with rising investment to drive innovations, including AI, the group full year gross margin rose to an all-time high, thanks to strong R&D investment, with R&D expenses to revenue ratio reaching a record high at 3.6% for the full year. By seizing the market opportunities through its operational efficiency excellence, the gross revenue growth recovered swiftly, with a 6% year-to-year increase in the second half of the year.
SSG spearheaded the group's service-led transformation and delivered multiple revenue and profit records for the third consecutive quarter, helping the group to transcend the market cycle. SSG segment profit rose 11% year-on-year, representing 35% of the combined segment profit across the three business groups. ISG revenue declined 9% year-on-year, amid sector-wide challenges early in the year, including a demand shift towards AI, but quickly regained its momentum in Q4. IDG made further market share gains in the PC and smartphone sectors, bolstering its profitability. Its segment profitability remained high within the upper range of its historical trend, demonstrating its resilience and agility. Basic EPS came in at $0.0841. Today, the board declared a final dividend of HKD 0.30 per share.
Taking into account the interim dividend of HKD 0.08 per share, total dividend for fiscal year 2024 will be HKD 0.38 per share. The Group efforts to optimize operational efficiency helped shorten the cash conversion cycle to -4 days for the full year. Days of accounts receivable and inventory together improved by 12 days year-on-year, offsetting the lower accounts payable days. The Group's robust free cash flow also facilitated continued R&D investment. Lastly, total borrowing reduced due to strong working capital management and the full potential of our 2024 convertible bond. SSG has once again achieved record high revenue performance for both the fiscal year and Q4. Its full-year revenue and operating profit grew 12.12% and 11% year-on-year, respectively.
The contribution from SSG to the three business group combined profit reached an historic high, underscoring its pivotal role as the group primary profit driver. SSG maintained its growth momentum in the fourth fiscal quarter, delivering double-digit year-on-year revenue growth for the 12 consecutive quarter. The Pay-As-You-Go TrueScale services continued to gain traction and posted double-digit year-on-year growth in contract signings. The fourth fiscal quarter also saw the signing of Device as a Service mega deal as the largest win to date for digital workplace service. During the year, SSG won its largest Infrastructure as a Service deal on extensive partner ecosystem, as well as its largest asset recovery service deal on superior data security assurance. SSG is actively leveraging AI to enrich its service portfolio to meet the evolving needs of its customers.
Two notable additions to the portfolio are AI Discover and AI Fast Start, which are AI-native services aimed at helping customers to deploy AI technology securely and efficiently in a hybrid environment. ISG achieved its second highest annual revenue, despite a 9% year-on-year decline, due to a shift in global IT budgets away from traditional general purpose computing. Revenue in the fourth fiscal quarter rebounded by 50% year-on-year, achieving a new quarter four revenue record and three consecutive quarters of quarter-on-quarter growth. Additionally, new sales records were achieved in multiple segments and products, including storage, software, services, high-performance computing, and edge. However, ISG investment for premium-to-market growth and the slower transition to DDR5-based systems had a lingering impact on its bottom line, resulting in a full-year segment loss.
Nonetheless, ISG's return to profitability plan had laid out strong initiatives to drive profitable growth once again. To capture the opportunities reflected in its AI pipeline of more than $7 billion, ISG announced more than 10 new large language model AI products, including nine NVIDIA GPU-based systems and several MI300X-based systems. These products are equipped with air- and liquid-cooling solutions, utilizing our award-winning Neptune technology and build off over 80 AI-optimized products already in the market. Additionally, the transition to new V3 systems is now aggressively accelerating with other new products and new partners' go-to-market offerings. Finally, ISG is focused on expense and operational efficiency to further drive improvement for profitability. IDG ended the year with a 7% year-on-year revenue growth in the fourth quarter, driven by solid premium to market growth.
This is the second consecutive quarter of year-to-year, year-on-year quarterly revenue growth, indicating a much stronger performance in the second half of the year, despite a 10% decline for the full year. OPM reached 7.1% for the full year and 7.4% for the fourth quarter, up 64 basis points year-on-year, and close to historic peak level, thanks to the operational efficiency, operational excellence, and higher premium mix for the fourth quarter. IDG is aiming to take the lead in the ongoing AI PC revolution, which marks a turn for the industry, creating opportunities for strengthening IDG's leading position. IDG is committed to AI PC innovations, not only for its hardware development, but also in areas of proprietary software and components to drive product differentiation.
Smartphones continue to shine with strong double-digit revenue growth in the second half of the year, driven by notable premium-to-market growth, particularly in the EMEA region and Asia Pacific region. The strong performance of our smartphone business is also a result of the continued effort to enable our product portfolio with focus on premium models, such as our foldable Razr phone. The group efforts for environmental sustainability have been well-recognized. For the fifth consecutive year, the group has been acknowledged by CDP for our leadership in climate change. Additionally, our Neptune liquid-cooled servers, designed to reduce energy consumption and carbon footprint, has been awarded the Best Green Energy Product by CRN Sustainability Tech Award. Adding to our list of achievements was the gold rating awarded by EcoVadis for our sustainability performance, placing us among the top 3% of all companies rated by EcoVadis.
These track records are a testament to the group's ongoing pursuit of excellence in product design innovation and dedication to environmental sustainability. Hybrid AI presents a significant and unique opportunity for the group. To supercharge growth, R&D investment will be made to unlock the full potential of hybrid AI and build Pocket-to-Cloud capabilities. The robust innovation efforts seen across the three business groups will enhance the group's competitiveness in the next-generation product design and solutions. This will, in turn, drive profitable growth and support the group in achieving our medium-term profitability targets. Looking ahead, SSG will roll out its new AI-native services and embedded AI functions across its service offerings to address enterprise customers' growing demand for AI technologies. Concurrently, SSG will focus on safeguarding its core business with high-value added support services across both PC and infrastructure segments.
Through collaborating with ecosystem partners, SSG is well-positioned to help customer accelerate their digital transformation journey and further enhance its financial contribution to the group. ISG aim to drive growth with continuously improving profitability, leveraging its investment in differentiated technology solutions in Hybrid AI, high-performance computing, storage, and edge systems and solutions. The business segment will further diversify its customer base, acquire new accounts, and strike a balance between general purpose system to drive profit and customize cloud offerings to drive scale and overall synergies and efficiency. This approach will ensure scalability, cost efficiency, and optimization of revenue growth and profitability. AI PC is about to kickstart a new demand cycle for products with premium pricing and attractive features for commercial users. This is critical for IDG to drive premium to market growth, higher ASP, and sustainable profitability.
To answer this demand, IDG is developing its own IPs for better performance in areas such as inferencing speed, language model compression, and memory consumption. IDG is also extending its differentiation efforts beyond hardware to components and software. Notably, with the introduction of Lenovo AI Core chip, Yoga Creator Zone, ThinkShield Security Solution, and AI Now personal assistants. IDG is in a strong position to build competitive advantages and lead the AI PC revolution. Finally, as always, we will stay committed to driving sustainable growth and profitability improvement for our shareholders. Thank you. Now, we will take your questions.
Thank you very much to YY and Wai Ming for the very detailed explanations. We will now open the floor for questions. If you wish to ask questions, please raise up your hand, and we will pass you a microphone. For those who are joining online, please submit your questions to the Q&A box. To make sure all our participants on the webcast can hear the questions, please wait for the microphone before you speak, and also kindly state your name and the company that you are representing. Now, may I take the first questions on the floor? Maybe the gentleman at the second row.
Okay, thank you for taking my question. I'm Leping Huang from Huatai Securities. I have two questions. One is about the AI PC. So I think we just see the Copilot+ PC launched, I think, a few days ago, and which is quite different versus the PC we saw in the beginning in the CES. So my question is: Do you think we have the required software and the hardware to or the chip to stimulate the growth of the AI PC market? It seems the first half is relatively weak. And I think I asked the question before, so what's your expectation on the ARM-based PC percentage for the whole next year? Thank you. This is first question.
Uh, Luca.
You want to do the second question, then I respond?
Yeah, okay. Okay, I think the second question is about the server business. I think we saw a very fantastic result about NVIDIA this morning. So, but we saw that they do more and more on the server market. Say, from a chip vendor, it seems they start to evolve into the system design and evolve into more like the cooling, used to be your stress point. So when the server market grow so strong, what's your view? Can you share more, share the growth of this market and more pie from this growth? Thank you.
Yeah. Luca, please.
So I'll start with your AI PC question, which gives me the opportunity to talk a little bit about AI PC and Lenovo vision on AI PC. So we are very excited about this week's announcement from Microsoft, and you probably saw we have also debuted two of our platforms with the Qualcomm Snapdragon X Elite CPU and Windows Copilot+. But I would say that is just the beginning. AI PC, as you know, has been defined by IDC, the generic industry definition with a PC that contains an NPU. But we are bringing maybe a more sophisticated narrative with our own five pillars AI PC definition, which includes your PC should have an AI agent with the capability of natural language interface. Your PC should have a personal knowledge base to better know you.
It's not only about NPU, but is more about a heterogeneous combination of CPU, GPU, and NPU, AI app ecosystem, and privacy and security. So I believe the AI PC is at the infancy, and many more applications that today we even do not imagine are coming to the market in probably not only in 2024, but more in 2025 and 2026. So we are at the beginning of this cycle. So that it helps me to respond to you that we believe this will be a tailwind for the PC industry. Started this year, we have already started to ship AI PCs with the original AI PC IDC definition, but it is going to accelerate in the second half, and then 2025 and 2026 will be strong years.
So yes, I think the combination of new architecture plus Copilot+, plus Lenovo is-- we'll also add our own IPs. For example, we will have AI Now. In China, we have already launched, called Xiaotian. It will be an agent that will coexist with Copilot+, and we believe this will be a significant differentiator. So we are optimistic about the adoption of AI PC going forward. Your second question was about ARM, and I think we are also optimistic about the evolution of ARM. I think we are happy to see there will be an x86 world, an ARM world, and definitely we'll see going forward, which one will have the better performance. But definitely, ARM has the advantages, thermal, battery life, several advantages.
x86, I believe, Intel and AMD are also striving to get, you know, more performance with less battery consumption. So I think will be an interesting race among the two. Thank you.
... Regarding AI in the infrastructure, I would say our strategy is working. We've grown from number six to number three as an AI infrastructure global vendor over the last few years, as reported by IDC. This strategy started back, if you remember, even in 2018, we won AI Server of the Year Award from HPCw ire. So this is something that's not new to Lenovo. But we invested $2.2 billion to create four AI innovation centers around the world, now delivering over 80 products and over 165 AI-optimized solutions. For example, running every Kroger store in the United States, over 3,000 grocery stores, to help eliminate theft at their self-checkouts, for example.
You know, what's exciting for us about AI is it's going to grow twice the rate of the general server market, but it's also pulling together storage. So while I talked about 50% growth of our 3S, meaning software, storage, and services, but actually, due to AI, our storage business grew over 70%, and this is in the last quarter, year-on-year. And we've now become number three in storage up from number 13, if you go back a decade ago. So incredibly strong growth in the storage market. There's been a lot of questions about momentum, and then we'll talk about the architecture. So just a few things that I don't think we've mentioned publicly yet. Our AI server mix for the second half has crossed 29%.
In the fourth quarter, our AI server revenue was up 46% year-over-year. On-prem, and not just cloud, is accelerating because we're starting to see not just large language model training, but retraining and inferencing. So we saw triple-digit growth in our enterprise and SMB GPU-based server consumption year-over-year. And our visible qualified pipeline, just since the last quarter, has grown 55%, now to over $7 billion. And to kind of put it in perspective, we were public, I think, a few earnings calls ago, that we are the exclusive supplier for NVIDIA and Microsoft Azure Cloud on OVX or Omniverse. But in total, our L40, L40S NVIDIA business, just since the first half to the second half of the year, is up 270%.
So these are incredible, incredible growth numbers. Now, looking forward, and if you go out to the back, we'll be first to market with the next generation NVIDIA H200, with Grace Blackwell, with the NVL72. So this is gonna put, you know, a $250,000 server today, roughly with eight GPUs, will now sell in a rack, like you're saying, up to probably $3 million in a rack. This brings us to Neptune water cooling. We won the CRN Green Product of the Year, the UN Top Choice Award for the green server, because we can deliver 40% lower power by using hot water. And while our competitors are starting to do this for the first time, we've been doing this for 12 years.
Today, 19 of the top 25 research universities in the world run Lenovo for their supercomputing, and we just got out of Hamburg International Supercomputing, where we're running one of three of the world's supercomputers. Most of those are now running Neptune warm water. DreamWorks, Harvard, and some of the largest automotive companies in the world are all now moving to this water cooling technology because we can, you know, do things that I think are incredibly unique in the industry there. So, we'll be time to market in these-- and we're already in high volume production now on AMD MI300X, and we'll also be time to market on Gaudi 3 as well.
So, I think there's a lot of differentiation and innovation to happen in the water cooling infrastructure, and I think Lenovo is the clear leader, and has been winning, you know, numerous awards on that.
Thank you. The next question from the floor, please. Yes, in the middle of the lady. Yes.
Hi, my name is Cherry Ma from Macquarie. Congratulations on the wonderful results in the last quarter of last year. My first question, I think it's more directed to Kirk. I'm wondering, from a geopolitical perspective, what Lenovo is doing on the ground in the U.S. to make sure that we defend our market share regardless of the changes in the administrations?
Well, I think we have a very diversified portfolio now that almost matches geography by geography, where the global total available market is. So North America is our largest market and actually one of our fastest growing markets, because we're very unique. You know, over 50% of the world is tier one cloud, 50% is on-prem. So we're almost perfectly balanced in the same way when you look at our earnings. So I think we're very geographically dispersed. We're also very excited that as we move to DDR5, our profitability will improve because we've brought all of our designs in-house, starting with the Eagle Stream and Genoa AMD products.
So as the market transitions from DDR4 V2 platforms to V3 and V4, that'll be announced shortly, all of those designs and those motherboards move into Intel manufacturing, whether that's in China or in Guadalajara. So part of the diversity we have is we have 35 factories around the world, and we build in Brazil for Brazil. 97% of what we're building in Europe is for Europe, and 97% of what we build in North America is in North America. So yes, we do have requirements sometimes, for customers in different geographies to have manufacturing in certain places, and we've expanded our manufacturing footprint to do that. We were also very proud yesterday to be ranked the, once again, in the top 10 supply chains of all companies in the world, by Gartner.
Our agility here of putting the factories where the people want them to give speed and velocity is one of the core attributes that I think is getting us to win business.
I'm sorry, can I have a follow-up? So you mentioned we have a $7 billion pipeline. Can you explain, is it only AI server-related revenue, or is it including storage? In terms of delivery pipeline, are we expecting these revenue to be recognized in the following fiscal year? In terms of profitability of your business group, what is the cadence towards about, breaking even and also, making profits? Thank you.
Yeah. So the qualified pipeline is GPU server-related, so that means that we've identified $7 billion out there of people that are going to make purchases, and our job is to go earn that business so it turns into backlog. So you can just imagine how much as, as MI300X has come out and the next generation NVIDIA CPUs, that's driven to. So that's very exciting. On the storage front, our ODM+ model is winning in the market. I'm proud to talk about the fact that we committed to bring in several other billion-dollar class customers, and in this last quarter, we actually have gotten design wins, for a new billion-dollar plus order in the server side, which will be a new customer, and a billion-dollar plus order in the storage side as well, in the tier one clouds.
The profitability goals will be very aggressive, because as we transition to DDR5 solutions, we improve our manufacturing costs. We had some slowdown in the ESMB market, while people were waiting for GPUs, and we're still constrained, as you've heard from pretty much everyone in the industry. But our global capacity of having $50 billion-$60 billion of procurement, we believe we're sourcing GPUs as well as anyone in the market. So as GPU capacity frees up and now the... You know, all the analysts, and, and we agree, the non-AI ESMB market is coming back to growth, and will be growing at a premium to market. The current quarter looks incredibly strong, so I think that gives us confidence going into our new fiscal year, that we'll be at a significant premium to market while improving profitability.
Thank you. Next question, the gentleman in the first row.
Thanks for taking my question. I'm Tony Zhang from CLSA. So my first question is about IDG. So we see IDG has sustained a very good margin, and, so as we, we see that the memory price has been increasing in the past few quarters, so what is it, will it impact our margin in the, for the outlook for IDG business?
Yeah, thanks for the question. So I think the memory cost, similar to other commodities, has been rising already for probably two to three quarters. So we are, as you see, well managed that, and I think the increase is going to be very moderate going forward, but we are very confident we are going to manage it without impacting our GP margin.
Thank you.
Thank you.
My second question is about server business. In our presentation, we mentioned that we have a plan execution to turn profitable for server business. So I want to ask, what is our action we have taken or going to take to turn profitable for the server business? Thank you.
Yeah. So again, the main market reason that we turned negative was that the ESMB market slowed down considerably as people shifted their budgets to AI-based systems. Now, for this fiscal year, we're seeing the AI market, the cloud market, and the ESMB market all recovering. So that's number one. Number two is we have some major new design wins that give us confidence as we go into second half of the year, that there's significant revenue and profit coming in from that. The third is that we're incentivizing our sales force slightly differently, and we're expecting a significant improvement in sales productivity by leveraging our pocket to cloud offerings.
So for customers that buy PC, server, and storage, there's incremental incentives for them this year through our channel partnerships, for them to, if they've been a ThinkPad customer, for example, for a long time and they bring on servers for the first time, there's incremental incentives there, and that's a very profitable, high-volume part of the business. And then lastly, like I mentioned, I can't underestimate this enough. We made a strategic decision to do our designs in-house, starting with DDR5-based systems. As you know, that transition took probably a year longer than the industry expected. So those factories are ready to go to start building the motherboards for high volume on DDR5.
So, when that happens, our manufacturing gets much, much more efficient, and we make more margin because the motherboards will be designed in-house, the systems at the L10 level and the full rack integration. We're now earning the business. In fact, some of our large cloud customers are actually having Lenovo do the rack integration for even our competitor servers when they're dual-sourced. So we'll bring in the server from our competitor and actually rack and stack it with the switch and all the cabling, and ship it out to the end customer. So think about, we get paid for the design of the motherboard. We get paid to license that motherboard to another ODM to provide a second source. But we get paid for that, we're not paying someone else to do that.
That we're getting paid for the L10, and we're getting paid for the L11.
Thank you.
Thank you. Question at the back?
Hello, I'm from... I'm Ivan Lam from Counterpoint Research. I have three questions. So the first one is upon the AI. So I think there's a price war coming for the LM, LLM token in China now. So how Lenovo addressing this competition in the price war? And then, because it sooner or later will come to the cost part of the AI service. My second question will be like, I think India market also important for Lenovo. And India is asking for the local protection for the PC and tablet. So how ready is Lenovo currently for the local protection? And the third question is that, I think Lenovo has just launched a new AI smartphone in China.
But given years that Lenovo still like or Motorola still maintaining a minor share, so how Lenovo and Motorola addressing these competition issues in China market? At the same time, in Latin America, I think currently that like Xiaomi and Tecno is like it's going quite wide in the region. And then how Motorola addressing the competition there as well? Thank you.
So for the China AI part of the server question, you know, today we have essentially three brands. We have ThinkSystem, which is our hardware server storage brand. We have ThinkAgile for software-defined, and we have ThinkEdge for edge AI. In China this year, we're launching two new brands and have launched two new brands. Wentian, which is a new brand in-built in China for China, that will be much more cost-effective and enable us to compete at a completely new level relative to the unique competitors that are in China only. And we have a edge brand called Weitian, which is also being launched for the edge AI. Because remember, 75% of the data is going to be computed at the edge for artificial intelligence, and we're rapidly moving from LLM over to retraining and inference.
I do want to say, this has been an incredible month because we made announcements with Red Hat AI. We just announced, a new relationship with NetApp around AIP od. We announced today at .NEXT, or this week at .NEXT, GPT- in- a- box with Nutanix, and we're a Microsoft Premier solution at the Edge, their highest-end hyper-converged offering. So every major software vendor, we're the partner of base, around AI, and obviously, in China, we'll have the local offerings of that as well. But the difference to your question on China is that we'll have a whole new set of brands that will be uniquely shipped in China for China.
I think what you said, the LLM cost, so you mean think about the cloud-based large language model, right? Or public AI. We call it public AI. So that's why we think the future trend is not just the public AI, it's the hybrid AI. So that's why with AI PC, AI devices will become more attractive, right? So definitely, public AI, so when they deal with more and more inference requests, so they will become more expensive, right? So the cost will be more expensive for those companies.
But if you use your AI PC to deal with some personalized use case, so definitely the cost is very limited. And also, people don't want to contribute all their private data or privacy to the public cloud company. That's why we think in the future the AI will be the hybrid AI. So in some common or public knowledge, public intelligence, you will use the public AI.
But for the personalized usage case, so probably you will use private AI, so which will have some cost advantage. Actually, I know the large language models company competitiveness is very fierce, particularly in China. So they need to find the business model, right, with this kind of public AI. But for sure, for us, we have already had the business model. If we can sell more AI PC, we can make more money. So that's very simple and easy to understand. But for sure, the hybrid AI is not just for individual, for the consumer, it's for enterprise customers as well.
So, for enterprise customers, they don't want to give their ... India, Brazil. In India, to build, so if the tariff is high, so we definitely need to leverage the local manufacturer to reduce the tariff, et cetera, et cetera. But regarding of the phone, so probably, Buniac, it's your question.
Yeah. So hello, everyone. Thank you for the question. So look, I think first, the business is growing overall, right? Last year, eight to 10 points premium to market. If you look second half, double of that. Last quarter, we grew in all geos. Latin America, that you mentioned, yeah, 1%, North America, 12%, Europe, 72%, Asia, 134%, and China, 31%. I think the competition in Latin America is not different. I think our share has been stable. The growth you're mentioning is coming mostly from 4G and from other vendors. We see still a lot of opportunity in Latin America to improve our mix. Our mix, our premium mix, as we reported, has grown from 13% two years ago to 17%.
This quarter, we expect to be more than 25%—more than 25%—more than 25% structure plan to continue growing, double digit premium to market. Faster in Asia and Europe, as we announced it in the beginning of the year, because our market share is a very small—smaller, but they are continuing to grow close to 20%. Last month, we hit 82%. It's the highest we ever had. Last month, we are number one in prepaid. So we still see growth, of course, faster in Europe and Asia. China is an important market, not less important. We need to succeed in China. We started accelerating Asia and Europe, but now we just launched AI, AI mobile, in China.
We are collaborating a lot on One UI with the PC and other IoT. So, we expect with AI now coming in place, there will be some opportunities to disrupt in China. But, you know, most of the growth next year is going to come from Europe and Asia. Some growth in Latin America and North America. And China is still grow not as fast as the other geos.
Thank you for the very detailed explanation. Our time is running short. Let's now move to the Q&A to our webcast audience. We have questions from Jefferies, Mr. Conor O'mara. For SSG, you mentioned AI workloads will run on a combinations of public clouds and on-premises, and also on the Edge and on the device. What kind of investments does the Lenovo need to make in products and staffing to be able to offer a total solution offering?
Okay. Thank you. Thank you, Jefferies. This is a good question, right? So, let me give you a holistic update, right? So if you look at SSG, as Wai Ming mentioned, we continue to see strong momentum in our business. If you look at our revenue growth, this is the eleventh consecutive quarter of revenue year-to-year growth, and at the same time, at a healthy margin of 20%. So this is another great quarter of SSG. Now, if you look at our conversation with our customer, I think almost all of our conversation with our customer is actually around AI, right? And I can add some data point and share with the team here.
I think, you know, our customer is telling us that 80% of our customer is strongly believe AI is gonna create a very positive impact for their business. And then another data point is 96% of our customer is gonna double down their investment on AI-related items, from infrastructure, to devices, to software and solution, right? So there's a lot of, you know, demand from around AI. However, the maturity of our customer in terms of, IT setup is quite different, right? Some of them are more mature, some of them need more help. I think this is exactly, the opportunity, not just for SSG, right, but also for the overall Lenovo, because we have the whole portfolio from pocket, to the Edge, to the cloud, software, and solution. So the SSG strategy has been, two prongs.
One is we have plug-and-play solution, or we call it hero building block, that are readily available for our customer who know what exactly they want. For example, our digital workplace solution, our hybrid cloud solution, and our sustainability solution, right? So this is first one. The second one is we just set up a AI practice, which is a team of people who have consultants, data scientists, and also experts in building infrastructure, especially for AI workload, to help our customer to look at their overall IT readiness, right? And hence, to explore what kind of AI solutions are more suitable and create better outcome for our customer, right? As YY mentioned, I think, you know, before you can harness the full power of AI, you got to make sure you have the right new IT, right?
My analogy is you can buy a great supercar, but if you have no petroleum, the car doesn't work. That's why you need data for AI, right? So this is the work that we have been doing. Now, I'll give you one example. This is a real customer example that we just done, right? So we have been working with one of the leading logistic customer in Asia on AI solution, right? So we go through the AI discovery, the MVP, the scaling, and then the enhanced cycle, where we help them to implement one of the state-of-the-art AI power logistics center, right? Which significantly improve the efficiency and also capacity of the logistics center of their customer.
So we build one warehouse with them, and they're very happy, and now we are engaging with them to build the second and the third warehouses, right? And these kind of solution are very replicable and scalable. Last but not least, I think Kirk, you know, has a very good program. It's called the Lenovo AI Innovator Program, right? This program is about how can we work with and get access to the best AI solution provider on the planet, right? You know, most of these are very good in AI solution, but they might not have the scale to reach to the global customer. They might not have the full stack of hardware, software, and solution that's needed to bring to, you know, some of the big local customer.
So our program is to work with these custom AI solution providers and bring it to our customer. The example that I just mentioned, the logistics company in Asia, is one of the solutions from our AI Innovator members of that program. To give you a number, today we have 50 AI Innovator Program members certified. And altogether, last time we count, there are 150 AI solutions, right? That are certified by, you know, Lenovo supplier Trusted Supplier Program, and readily available for SSG to bring to our customer. Thank you.
Thank you, Ken. Before we conclude our presentations, may I ask YY, is there any final remarks we would like to share with us?
Thank you for participating in this discussion. So, actually, this year is Lenovo's 40 years anniversary. So, almost in Lenovo's 40 years of history, so almost every 10 years, every decade, so we have a different scene. So the first decade, so we probably only distribute the other brand. So a second, we build our brand with our PC business. Third, we become the global international companies through the acquisition of IBM PC. Then, the fourth, we become very diversified business company. So as I just introduced now, with 10 years, so 10 years ago, Lenovo was just a PC company.
But now, 45% of our business comes from non-PC business or business groups. So, we are starting our fifth decade. We think the theme of this decade will be AI. We think AI will transform all our businesses. So, AI devices, AI infrastructure, and AI-native and embedded solutions and services. So, I always say, so working in this industry is our fortune. So every day, you can see the innovation, you can see the different things, you can see the potential of the growth.
So, definitely, I believe, so Lenovo, we will catch up this opportunity to become a strong AI player in the world. Thank you.
Thank you. Thank you very much. Thank you for the management. This concludes our presentation. Thank you for your support on Lenovo, and not least for all the guests on stage onsite. Please stay behind and check out the booth that's outside here. Experience everything that we have prepared.
The AI server.
Yes. Thank you!