Good morning, good afternoon and good evening. Welcome, everyone, to Lenovo's earnings media webcast. This is Jenny Lai, Vice President of Investor Relations at Lenovo. By now, you should have received a copy of our earnings release and earnings presentation. Before we start, let me introduce our management during the call today: Mr.
Yang Yuanqing Lenovo's Chairman and CEO Mr. Gianfranco Lenci Corporate President and COO Mr. Wang Wei Min, Group CFO Mr. Kus Gaujian, President of Infrastructure Solutions Group and Mr. Sergio Buniak, President of Latin America and Mobile Business Group and President of Motorola.
We will begin with earnings presentations. And shortly after that, we will open the call for questions. Now let me turn it over to Yanqing. Yanqing, please.
Hello, everyone. Thank you for joining us. A year ago, as we faced a great uncertainty, I told you we would continue to be resilient and strive for new heights. Today, I am pleased to say that we have indeed seen phenomenal growth in every part of our business and have achieved both a record fourth quarter and a new milestone for our fiscal year. Starting with our historical fourth quarter results.
Group revenue reached US15.6 billion dollars growing 48% year on year, fastest growth in almost a decade. Pre tax income sold to US380 million dollars Net income reached US260 million dollars both around five to six times as much as last year. All our core businesses achieved high double digit growth in revenue at the same time for the first time in six years, demonstrating our progress in diversification of our businesses. For Intelligent Device Group, PC and Smart Devices had its best fourth quarter ever with US12.4 billion dollars up 46% year on year. Even more, profitability hit an all time high at 6.7%.
All of our geographies realized high double digit growth in revenue, particularly in China, we grew 80% year on year. Our PC volume outgrew the market to further strengthen our leading position. Tablet volume also had a breakthrough growth of 157 year on year, around three times as fast as the market. Our consistent strategy to focus on and invest in high growth and premier segments keeps delivering strong results, as Gaming PC, Thin and Light, Chromebook and Visual volume each grew at more than double digit rates and outgrew the market. Our Mobile Group continued its momentum of profitable growth with terrific results.
Revenue achieved hyper growth, up 86% year on year. Pre tax income reached US21 million dollars record high since the Motorola acquisition. With the expanded carrier relationships and the strong product portfolio, particularly five gs products, our volume grew at a triple digit rate in North America, Europe and Asia Pacific. Latin America remains a stronghold with market share reaching a new record of nearly 21%. Our Data Center Group had a tremendous quarter.
Revenue grew at a strong 32% year on year, the fifth straight quarter of Premier to market growth. Profitability improved 4.4 points year on year, the biggest increase in over two years. Both our Cloud Service Provider segment and Enterprise SMB segment achieved year on year growth. In particular, the CSP business grew 73% year on year. Our Storage, Software Defining Infrastructure and Software business all had record fourth quarter revenue.
Particularly, storage revenue achieved a high growth of 73% year on year. Our service led transformation accelerated, fueled by ongoing strong growth in software and services, with revenue up 44% year on year. Managed services revenue, including DaaS and Truth Scale, nearly doubled and solutions revenue grew 65% year on year. This historical quarter ensured we reached a significant fiscal year milestone. For the first time, Group revenue surged to over US60 billion dollars adding more than US10 billion dollars in just one year.
Profit grew even faster to reach new records, with pre tax income of almost US1.8 billion dollars and net income was almost US1.2 billion dollars both were up more than 70% year on year. Our Intelligent Device Group and the Data Center Group achieved revenue growth of 2015%, respectively, as both reached historical highs. Our Software and Services revenue grew twice as fast as the overall global revenue at almost 40% year on year to a record US4.9 billion dollars which now makes up 8% of overall company revenue. This demonstrates our solid progress in service led transformation. These results come from excellent performance across all our businesses, delivering to the new needs in the new normal, leveraging our clear strategy, innovative product, operational excellence and our global local model.
While we completed a true historic and record year, we are not stopping here. Looking forward, we will further drive our service led transformation to capture growth opportunities created by both the new normal and the new technologies. We see three important industry trends now and post pandemic. The first trend is consumption upgrade, as people spend more time on their devices, leading them to buy more devices and upgrade more often as we work, learn, entertain from home. At the same time, the adoption of commercial five gs is driving the shift from computer to computing, making more traditional devices intelligent.
The second trend is infrastructure upgrade. The ever growing use of online applications has not only increased the demand, but also rested the bar for ICT infrastructure. Infrastructure not only refers to traditional data center products like server, storage, networking, but also edge or cloud total solutions for computing power, from design and deployment to operation and maintenance. The third trend is application upgrade from digitalization to intelligent transformation with AI at its core. Industry survey by a leading consulting company shows the digitalization and the intelligent transformation of enterprises have accelerated by three to four years to enable more productive and efficient processes under remote working conditions.
The massive amounts of data from business digitalization and various smart devices are stored, organized and analyzed with computing power from edge and cloud. Then by combining the data and computing power with the algorithms based on industry know how, we built intelligent solutions to transform industries. At our last earnings call in February, I shared that Lenovo was making changes to align our organizational structure to our 3S strategy. Under the new structure, Intelligent Device Group or IDG Infrastructure Solutions Group or ISG and Solution and Service Group or SSG, will each focus on the unique opportunities created by these three upgrade trends to achieve sustainable long term growth. In the year ahead, IDG will continue to drive leadership in PC and tablet through innovation and operational excellence, and further penetrate in new areas such as embedded computing, Smart Office, Smart Edge and ARVR.
And Mobile will continue profitable growth as we take advantage of increased market demand and changing competitive landscape, and maintain strong momentum in North America, Europe and Asia Pacific, and keep our stronghold in Latin America. ISG will continue premier to market growth. We will further expand our cloud service provider customer base and grow our channel business through our newly integrated OneLenovo sales organization structure. We will drive storage, software defined infrastructure, software and services to further improve profitability and ramp up true scale Infrastructure as a Service. Our new business group, SSG, will strengthen our attached service portfolio and increase attach rates, expand managed services and develop repeatable solutions in key vertical industries.
Meanwhile, we have reduced greenhouse gas emissions by 92% over the past decade and set new science based targets to continue making progress in sustainability. In fact, we were being recognized by the Annual Corporate Knights Index as one of the world's 100 most sustainable companies. The past year certainly presented many challenges that reminded us of the importance of adaptability and resilience, but the past year also created opportunities for Lenovo to empower our customers and society to do more than just survive in the new normal, but to thrive and achieve even greater success. We will continue to turn challenges into opportunities and build an even smarter future in the year ahead. Thank you.
Now, let me turn it over to our CFO, Wei Ming. Wei Ming, please.
Thank you, Yanjing. I will now take you through Lenovo financial and operational performance in Q4 and fiscal year twenty twenty one. We had a strong finish to a record fiscal year. For quarter four, we delivered $15,600,000,000 in revenue with a 48 year on year growth, which is the fastest growth in almost a decade, with net profit increasing by more than 5x. Not only did all our three business groups achieve high double digit sales growth for the first time since Moto and Eight Eighty Six acquisitions, The group high margin software and services booking revenue also grew at its highest rate ever since our service led transformation started.
Our core competencies of operational excellence, time to market and innovation are setting us apart in the post COVID world and accelerating our transformation towards end to end solutions. Our E2R ratio was reduced by 1.9 percentage point year on year to 14.1% as a result of disciplined control and economies of scale. Profit attributable to equity holders was $260,000,000 and the basic earnings per share came in at $0.02 $19 Q4 marked another exceptional quarter for our PCSD business, with sustained its position as the largest global PC brand by market share. All regions saw year on year revenue increases in the range of 29% to 80%, leading to a blended 46% growth and record revenue of $12,400,000,000 for the group. PCSD delivered a record profit of $831,000,000 in the fourth quarter with a 58% year on year growth.
Its pretax margin expanded 50 basis points to an all time high of 6.7. In addition to the high growth segments, which have been our strong catalyst in past quarters, e commerce and services upselling emerged as a new growth engine to propel hyper revenue growth of 42% to 58% as well as higher profitability. Enterprise demand recovery was also encouraging as evidenced by double digit growth in shipments. Our MBG business delivered a hyper sales growth of 86% year on year, while improving its pretax profit by $80,000,000 year on year to a record $21,000,000 since acquisition. We achieved premium to market growth across our major geographies and outperforming the market.
We have grown our MBG business by strengthening its product portfolio via a five gs for all strategy and broadening its carrier ranging across key focused markets. Data Center Group concluded the quarter with a 32% year on year growth to $1,600,000,000 sales, thanks to the robust hyperscale demand and new customer acquisitions. Revenue of enterprise SMB business reached three year high despite continued soft demand from enterprise. Their high margin bode well to the sales mix, along with more profitable cloud service provider projects. DCG pretax improved by $45,000,000 year on year, the largest expansion in the last ten quarters.
It has been three years since we started our software and services led transformation. The high margin software and services business continued to see accelerated growth in invoice revenue to its highest ever rate of 44%, contributing 7.9% of group sales. Deferred revenue increased 32% year on year, which further secured our future growth by building a sticky business model. Managed Services enjoyed 91% growth in invoice revenue, supported by upselling opportunities, leveraging the growing popularity of our as a service solution. Our group generated an additional $10,000,000,000 revenue for the full year, capping off a record year with the highest rate in almost a decade.
Our revenue grew 20% to $60,700,000,000 Profit attributable to equity holders increased 77% to $1,200,000,000 and basic earnings per share came in at $0.09 $54 BCSD, DCG and Software and Services businesses each scored all time annual revenue or record profit. Challenges from the pandemic impacted MBG first half performance, but its swift recovery in second half led to its higher half year profit since acquisition. Our E2R ratio was reduced by 110 basis points year on year to 12.5% on disciplined expense control. Pretax income was $1,800,000,000 up 74% year on year, while pretax margin reached 2.9%, its highest level in the last thirteen years. All of our business reported margin expansion.
We have repositioned Lenovo to take advantage of the higher demand for computing power, data and end to end solutions. The consistent and strong earnings trajectory across our business units that underscore our company achievement after the Intelligent Transformation. Today, the Board declared a final dividend of HKD0.24 per share. Taking into consideration of the interim dividend of HKD6.6 0.6 per share, total dividend will be HKD 30.6 per share, a 10% increase compared to dividend paid in FY 'nineteen-'twenty. For the fiscal year, our operating cash flow improved by $1,400,000,000 to $3,700,000,000 thanks to strong earnings and working capital management.
To optimize our capital structure, we reduced our net debt and repurchased perpetual securities amounting to a total of $1,400,000,000 In the fiscal year, we obtained our first investment grade credit rating with a subsequent upgrade. All of these actions together save us 13% in financing costs and perpetual securities dividend. We expect more cost savings in the next fiscal year. PCSD business achieved many performance records as industry demand continued to exceed expectations throughout the year. Its revenue grew 22% to an all time high of 48,500,000,000.0 while pre tax profit advanced 34% to CAD3.1 billion.
Since the outbreak of the pandemic, there have been many unexpected lifestyle changes, including the one PC for person trend, rising usage intensity and e commerce revolution. The group has leveraged our operational excellence, product innovation and quick time to market capability to address these new demand tailwinds. We maintained a solid worldwide number one position for the third consecutive year and became number one in EMEA in the second half of the year for the first time in our history. We made the strategic decision to drive high growth segments and expect segment profitability. We also deployed our capital and resources under PCSD to grow the high value added services business.
As a result, the business further extended its industry leading profitability to set a new milestone at 6.5%. In the earlier part of the fiscal year, MBG operation was negatively impacted on both supply and demand side by the pandemic. Nevertheless, our commitment to strategic action has helped us stage a swift recovery in the second half of the year. Thanks to the strong momentum across key markets, the business delivered a 39% revenue growth in second half and a 9% for full year. Similarly, the pretax performance reversed from a loss in first half to a record pretax profit to $31,000,000 in second half, up $87,000,000 year on year.
We achieved a record market share in Latin America and North America and nearly doubled our revenue base in Europe. Our strategy remains clear, driving product portfolio enhancement to include more premium models, a five gs for all strategy to make five gs connectivity more accessible and broaden our carrier ranging to drive regional expansion. Looking forward, MBG will target to groom NA to be a significant contributor and embark its Europe business at a faster pace while maintaining LA at its strong home markets. Data Center Group delivered a record high annual revenue at $6,300,000,000 up 15% year on year. CSP is the largest growth contributor with a strong double digit increase.
Positive catalysts for CSP included public cloud demand and customer and product expansion. We are winning projects, not only utilizing our in house design and manufacturing, but also high end design, storage and HPC to expand the number of growth engines. ESMB revenue were at its highest in the last three years, outperforming the overall enterprise market even though market demand was sluggish. Storage, SDI, software and HPC performed well, posting strong double digit growth and record revenue. Our DCG is now ranked global number two in entry level storage, advanced from five last year and extended its one lead in HPC segment.
On pre tax, DCG saw improved profitability for the fourth consecutive year by $57,000,000 year on year and narrowed pretax loss to $169,000,000 driven by board based improvement across CSP and ES and P. Since this group started its service led transformation, the software and services business had made tremendous progress. Its invoice revenue grew, accelerated and reached 39% for the year to $4,900,000,000 which is nearly twice as high as the group revenue growth rates, now contributing 8% of the group sales. The business has broadened its scope and scale and has won many landmark deals. Managed services enjoyed a 78% growth, thanks to mega as a service deals signed around the world with leading technology, retail and financial institution as well as global spot events.
Complex Solutions posted a strong 58% growth from all verticals. Our test services continued to grow at a fast pace of 28%. Deferred revenue increased 32% year on year to $2,200,000,000 pointing to a fast growing recurring revenue base as we make further inroads to build a sticky business model. With regional economy on pace to expand and signs of a rebound in enterprise IT spending, the group will continue to ride on recovery led opportunities and deliver sustainable growth. With our new organizational structure, we plan to supercharge the growth opportunity arising from our surface led transformation efforts and capitalize on long term upgrade cycles.
With the investment grade rating, we will further improve our debt capital structure by leveraging current low interest environment. Our planned CDR listing will also further our market leading position in China and provide capital for us to invest in technology, hence, further support our long term growth. By business growth, our PCSD business will continue to address opportunities emerging from new smart devices and expand its leading position in both market share and profitability. It will leverage its innovation, solution capabilities and further improve its world class supply chain to meet strong segment demand, partly driven by commercial recovery. For Mobile business, the group will focus on sustaining its strong momentum in North America and Europe while maintaining its leadership in Latin America.
MBG will further push product innovation and accelerated five gs smartphone launches to score wins in more markets and stay on the profitable growth journey. Our Infrastructure Solutions Group, or DCG business, will aim to grow the channel business with the One Lenovo platform while delivering premium to market growth and profitability. In the ES and B segment, the group will grow high margin services tax rate, expand high growth segments and position its hybrid cloud solution to drive a product shift in computing with edge to cloud solutions. For the CSP business, the group will continue to expand customer base and gain wallet share among existing accounts. To achieve that, the business will leverage its unique strength, including in house custom design and worldwide manufacturing capability and expand its product portfolio with advanced configuration and storage platform.
The newly established SSG will bring our service led transformation to a new level. We will continuously focus on expanding our capabilities in three key priority segments with clear multiyear growth targets. We will raise the attach rate for our test services, drive hyper growth in managed services and as a service by enhancing delivery, differentiation and platform and develop end to end solutions and our Lenovo IP to support our growth in solutions. Thank you. And now we can take your questions.
Thank you. Now we will open the line for questions and this session will be in English only. Please be reminded to limit yourself to two questions at a time and please also state your name and company before asking questions. We will now turn it over to you. Please give us your instructions.
Thank you.
First question comes from the line of Leoping Huang from Huatai. Please go ahead.
Okay. Thank you for taking my questions. Congratulations for the very good results for YY and WeiMi. So I have two questions. One question is about the impact of the chipset shortage.
And we see you recorded very good results last quarter. But looking forward, so do you see any impact from shortage? This is number one. And the second one is that we see reopening of the major countries. And so in the major countries, do you see the PC demand become remain still strong?
Or do you see the market especially do you see the consumer market has any change? Thank you.
So can I invite Gianfranco to answer your question?
Can you hear me? Thank you, Yunji. Yes. Hello? Yes.
Okay, good. Okay, impact of the first of all, let me say, we are facing this shortage since Q4 last year. So it is not new. We have seen some deterioration, frankly speaking, in Q1 in terms of shortage and now it's getting relatively stable. And I would say moving forward, I don't expect further deterioration, but for sure we continue to face the shortage for the next twelve months, eighteen months.
It's mainly coming not only from PC demand, but also from other products, automotive and so on. We have been able and you see the result to manage the shortage quite well in Q4 and last year in Q1. And we will continue to manage as we did in the past also in the future. There is another important thing that probably because when we talk about shortage of people, they just think about IC and they think that all the IC are the same or similar, right? By the demand from car, the car industry.
But usually, the IC that they utilize is based on a very, very old fab technology, 28 or even higher in terms of technology. While we use the steel chipsets that are coming and IC that are coming from a little bit more recent technology. So the two things are not really overlapping too much. And while it is very difficult to invest on very old technology, it's different from our side. But let's say, in terms of impact, forward, as I said, will be probably in a similar situation like Q1 or Q4, but not a deterioration.
Talking about PC demand, think it's a very good question because it is true that a lot of countries in the world, they are finally opening up and it looks like we are slowly getting out of the tunnel. But when I see the demand in terms of PC this quarter, even for the next following quarters, it is very, very strong. I think the real difference is not because people it's because people working from home, learning from home, playing from home, everything from home. But I think the major difference is people, they start to realize, one, they need one PC per person and not one or two PC per out Second, and there is a very there are few very interesting survey in terms of what the people thinks about PC after pandemic, I would say. Secondly, the experience on PC, a very different experience than what experience on phone on certain applications.
So PC is becoming much more key for a lot of people, not only because everything from home, but also for gaming or entertainment or other things, because they realize they can do and they can get a much better experience than what they get on a phone or a tablet. The last thing is that when you look at the store base, we have a very old store base, four, five or six years, and it's a huge number. And all these people, they are or they will be in the position to refresh their own PC. So we will see an acceleration of the refresh for the entire installed base. But again, because if you want to get good experience, if you want to enjoy certain experience, you need a brand new PC, not a four, five years old PC.
I'm quite optimistic. We are quite optimistic that what we see in terms of growth, but also if you look at the market research data and so on, it will continue for several quarters, this year for sure and next year also.
Thank you, Gianfranco. So given this is a very important question, so I just want to echo what Gianfranco just said. So PC and the tablet demand are still very strong. So not only we see big volume of the backlog, so in our order pool. But also, we are so you can see the number, particularly China number.
China has already reopened for a couple of quarters. But their demand is still very strong, even stronger than other geographies. So that can prove what Jiang Fangbo just said. So this pandemic just push the people's behavior change. So, they try to own PC per person.
And also, people are spending more time on their devices. And they are buying more devices and upgrading more often. So, as their work, learn and play from home. So we believe that the demand will continue to be strong for a longer time, not just because of the pandemic. And also regarding of the shortage part, so I think this shortage is mainly driven by the stronger demand than expected.
But for sure, not just the PC and the tablet, but also electronic card as well. So it's caused by additional growth. So that means the market will continue to grow and then the number will also grow. It's just how much growth would depend on how much supply we can get. But in that aspect, so we are confident that Lenovo can perform better than the market and our key competitors.
First, we have a very strong global supply chain, which was just awarded the Gartner's Top 25 supply chain.
Also, Lenovo has a very
unique business model. Most of our competitors don't do manufacturing by themselves. They're just outside to a third party. But Lenovo has a hybrid model. We do 50% outsourcing and 50% in house manufacturing.
So, this unique business model gives us advantage to approach upstream vendors and build a better relationship with them. So, shortage like this, we can leverage this relationship to get better supply situation. So, I'm confident that we will continue to outperform the market and key competitors enjoy sustainable growth. Thank you. Next question.
Thank you.
You. Next questions will come from the line of Jerry Su of Credit Suisse. Please ask your question.
Thank you. Thanks for taking my question and congratulations on the good results. For the my first question is still regarding PC. I think education or corporate demand has been quite strong for the past couple of quarters. Can you give us some idea what do you think about the education penetration rate, also the growth outlook into the later half of the year?
I think there are some concerns that this could slow down due to some of the some area, it's reaching some higher penetration. So I would love to get your thoughts on that. And then secondly, on the data center side, TCG, I think in last quarter, it seems like that the loss is at about million dollars which, please correct me if I'm wrong, that this probably means that it's already at revenue level excluding the depreciation and also the amortization. So how should we think about the future profitability of DCG? Thank you.
Okay. So, Gianfranco, could you continue to answer the first question regarding of the education market? Kirk will
answer Yes, education and corporate, right. But I think we need to make a distinction between corporate and education. In the sense that when we look at education, we have seen due to the pandemic, a huge demand on education, mainly Chromebook, not only Chromebook and we continue to see a strong demand on education quarter, this quarter and also for full quarter. Is mainly coming from Yes.
Hello? Yes. So we now it's fine, now it's fine. So we just couldn't
hear It's good. No, as I said, we continue to see strong demand from education, but also moving forward, not only in last quarter or Q4. There are some seasonal effects because this is education is a kind of seasonal business. But as I said, also if you look, it's mainly Chromebook, but not only Chromebook. And when you look at the projection in terms of Chromebook growth, we are still talking about a big double digit number in the sense is starting with three or four.
So for this year, and I think also for the following year. Corporate, I think is a very different picture in the sense that we have seen a slowdown during pandemic with of course corporate reducing investment and trying to control cost. Starting from Q4, we have seen a rebound. Last quarter was already quite strong and we expect that as soon as people they come back to work, work in the office, mean, not from home, this demand will accelerate, because what we see in corporate, it's a big transition from I'm talking about corporate, not government, big transition from desktop to notebook, simply because the people they want to be ready on the quitter for any issue can happen in the future. So they are really we see a replacement of the desktop installed base with notebook.
The other important thing when you look at Europe, but also U. S. Or some other countries, there are huge programs on digitalization, right. In Europe is one of the four or five key element the fund it's on the from the European community for the different countries. They need to invest on the one clear guideline, they need to invest on digitalization.
That means that again, this means that you need to upgrade or to update or to look at the new installed base in terms of not only PC, in terms of PC for sure, but also in terms of infrastructure, server and storage, the entire infrastructure. And this is when you look at the number in terms of amount of it's really, really huge. So corporate, in my opinion, we see a speed up of the growth during the next three, four, five quarters without any doubt. Thank you.
Okay. Thank you. Thank you, John Hancock. So Kirk, would you like to answer the second question? Two, please.
Yes. Thank you for the question.
Our strategy within the Infrastructure Solutions Group is to deliver hyper growth and continued profitability improvements both year on year and quarter on quarter. I think the nice thing about the data center business is the design wins to get good long term visibility into the key profit drivers that will continue to improve DCG's profitability, ISG profitability in the future. And that is that we're improving not just in server, but in storage. Our in house design and manufacturing is giving us design wins at the motherboard level, and we're expanding our services business and the attach of our premium services at a double digit increase to our servers and storage versus last year. And lastly, we see the enterprise and small business market and the on prem as a service through our truScale now growing significantly with our as a service business growing triple digits year on year.
So all these things are sticky and long term profitability trends that we see. In house manufacturing and design with motherboards, expanding our storage, you saw us grow 73%, which is a huge premium to market. And our commitment remains to continue this profitability growth each and every quarter. You.
Thank you. Next
question comes from the line of Albert Hong of JPMorgan. Please go ahead.
Hi, management team. Thank you for taking my question. Congrats on the strong results. My first question is could you share more color on the channel inventory level? And what's our pricing strategy for PC under tight supply demand?
And my second question is the mobile profit was quite amazing. What will be the future profitability trend if the supply demand become more balanced? Thank you.
Okay. So, Gianfranco, could you please answer the first question regarding our channel inventory and the pricing? So, Puneet, please prepare for the second question. Yes.
Thank you for the question. It's a very good question, because I think the channel inventory has probably never been so low in the history. We are running today in certain countries with two or three weeks of channel inventory, which is really too low. In the sense we were used to run with something between six to eight and now we have 50% of what we need. And frankly speaking, we will be in this situation at least for the next two or three quarters, because when I looked at our backlog, as Yanxing said, we are not able to reduce our backlog quarter by quarter.
It's still there with the same amount more or less with the same amount of unit. So, inventory is worrying them, but not let's say, but because it's too low. And this is, I would say, everywhere, really everywhere from Europe China is even probably one of the worst place in terms of China inventory. In terms of being too low, Europe, U.
S. And Latin America, really everywhere. We need to deal with this situation. So pricing with this stronger demand on one side, some components, but mainly when I look at components, it's really very cheap components. And then you talk about IC, you are talking about sense not but pricing are slowing going up.
And in order to maintain the profitability we need and also in to make sure that we continue to watch pricing. We still we want to be competitive, of course, but pricing are going slowly going up. And I think we continue to go up for the next three or four quarters because the component cost trend. On the other side, it's not affecting demand because demand is so strong that it's really not a we didn't see we start already the exercise in last quarter, even in Q4 partially, but we didn't see any impact on the demand at all.
Thank you. Thank you, So Bunya, would you like to answer MBG's topic?
Yeah. From the mobile side, I think number one, despite the high growth, the demand was even stronger. We are seeing demand growing in many different regions across the globe and even in different channels, including like enterprise where we are just starting. So I believe in the future, we will sustain the profitability. We don't see any deterioration.
And we expect to still grow in premium to market for the full year and the next few quarters. And we expect demand to hold down. As much as there is more competition from some players, as you mentioned, there are other editing that are benefiting demand. So our expectation is to continue to grow premium to market and we are seeing demand stocking channel at very healthy low levels and demand across multiple regions, especially in North America, Latin America and Europe, but also markets like India growing in a good pace. And we will continue to focus on our strategy that is focused on our core strengths and grow profitably like we have been doing now for the last two to three years.
So thank you, Bunyak. So we definitely have a higher expectation on our mobile business to drive the profitable growth. Actually, we think we have the better position than other competitors in some markets, particularly mature markets in North America. So, we will leverage some competitors' exit to further grow our share. Definitely, similar situation will happen in Europe and some Asia Pacific market as well.
So we will keep the strong growth profitable growth in those markets. So actually, for the mobile business, we could grow even stronger, but we are limited by the supply as well. So we will try our best to get more supply to support our profitable growth. Thank you.
Thank you, YY. We are now ready to take the last
Your last question comes from Grace Chen of UBS. Please go ahead.
Thank you. Thank you very much for taking my questions. I have two questions. Number one is just a follow-up on the component shortage topic. When do you I'm wondering whether you are able to quantify the size of component shortage?
And when do you expect the component shortage will ease? And then second question about servers. I understand that your servers have been growing quite well. I'm wondering whether you're also seeing some component shortage in servers? And also, what do you believe is your key competitive edge to win server cloud server orders from the OEMs?
Thank you.
So John, how about you would you have to repeat the answer?
No, but it's also a very interesting question. It's a very good question because to quantify is always not easy. But I would say, if I look at our back order, and we can probably say that in terms of quantifying the shortage, we can probably say that it's around the 20 in the range of 20%. So without shortage, we could probably ship easily 20% more. So still, the brilliant result in Q1 without shortage could be much, much better.
Let's put it in this way. But it's not easy to quantify because unfortunately, we are not talking about one component or two components. We are talking about a big number of different small components. Then in some cases, you can if you are flexible and good enough, and this is why also it's important to run your own factory, you can easily switch and you can be flexible enough to enjoy maybe some other components that are available rather than what is not available. But you need to be very flexible, you need to do qualification very quickly.
You need to do a lot of things. But if you run, let's say, your own destiny, it's much more easy that depending from an ODM supplier. When, as I said, I would not expect that in the next twelve eighteen months, the situation will improve. It will not deteriorate, probably it will stay at the same level, but I would not expect that for the next twelve months to eighteen months. So we will see still the same situation also next year.
Because to build up capacity, when you talk about the fab silicon foundry, it takes some time. There are big investments going on in different areas of the world in terms of new fab, but they will not be ready before twelve to eighteen months.
Thank you. You. Thank you, Jean Francois. Kirk, would you like to add something on PCG or ICG? Sure.
So two questions. First is servers being impacted by component issues. And second is how do we differentiate in the cloud service provider market versus the ODMs. So I think certainly, there's no one in technology, I think, that's not affected in some way by the chip shortages. However, I think we've done an outstanding job multisourcing across our portfolio.
We just had, for example, record AMD shipments in our server technology with all of the latest Milan announcements we just made with AMD. We've announced 18 new platforms this quarter in ThinkSystem and ThinkAgile, and we're multisource across just about everything. So we don't see that being a major impact to having a significant double digit premium to market and growth as we move forward here. As our supply chain is a little bit more nimble, I mean, we are bringing in inventory for the cloud service providers based on future orders. I think we're excited that we're not just winning the server business, but we're also winning significant storage orders, eight way orders, high performance computing in the cloud orders that's improving our profitability.
And so we're able to pre stage that and build that equipment because we're not just doing the system integration or just the rack integration, we're also doing the motherboard design. So we get to get a start on that much earlier. And candidly, we don't need to worry about ODMs because we're now designing our own motherboards in house, manufacturing them in our own motherboard factories and integrating them in our own system factories around the world. In fact, we've recently talked about significant new motherboard factories in Mexico, expanding in China as well as expanding in Europe and in Hungary to increase our capacity based on the demand we see. So I don't think the chip shortage changes that.
Our strategy for the cloud, for the public cloud is what we call ODM plus So we have 40,000,000,000 a year of procurement power. So we have much larger procurement power, especially in a shortage than most ODMs. Unlike the multinational traditional OEMs, we can build our own motherboards. We're not outsourcing those to someone. So that improves our profitability and our agility.
And we're in 180 markets. So as we take China cloud providers global or we take U. S.-based cloud manufacturers global, in either sense, we have the ability to get to every corner of the globe from India to Brazil to South Africa to anywhere in the world. So this is our supply chain, which was just ranked number 16 by Gartner in of all companies in the world and number five in tech, is proving to be a significant advantage for us both in procurement and in supply chain. So I think 73% growth, this is just the beginning because we know the design wins in cloud are coming and we know that those design wins are even going to have a better mix with improved profitability.
So
know, we have met our strategy very clearly. So we will drive the three ms strategy, smarter IoT and smarter devices, smarter infrastructure and smarter verticals. So definitely, our solution and the service business will be key to realize this transformation. So, we will drive a high attach rate of the attach of the service. We will drive hyper growth for the management for the managed service, including device as a service and the true scale or data center as a service business.
And meanwhile, we will drive multiple smart verticals in manufacturing, education, retail, etcetera, etcetera. So Lenovo has very strong execution capability. Once we have the clear strategy, we will drive the results. So actually, a couple of years ago, you were worried, so whether we could turn around our mobile business and data center business. So we couldn't give you answer immediately.
But over the past couple of quarters performance, you could see clear progress in these two businesses. So that can demonstrate a number of the execution capability. And also, it could demonstrate our further step of success of diversification of our businesses. Definitely for the next step, driving the intelligent transformation will be our strategy. And I hope with Lenovo's proven record, you can believe we can deliver.
Thank you.
Thank you, Yanqing. And we thank you very much for joining today's call. If you any of the investors or analysts has any further questions, please feel free to contact me or the IR team directly. And the replay of this webcast will be available in the next couple of hours on our Investor Relations website. Thank you again for joining us.
Bye bye now. Bye.
Ladies and gentlemen, that concludes the conference for today. You may now disconnect your lines.