Lenovo building plants to make tablets, smartphones

Chinese PC maker is ramping up efforts to compete in the mobile devices market

Chinese PC maker Lenovo plans to invest more than $796 million to build facilities for the development and production of tablets, smartphones, and other mobile devices, it said Monday.

Lenovo said it held a groundbreaking ceremony for the company's new industrial center located in the Chinese city of Wuhan. The facilities there, which will house research and development, production and sales, will begin operations in October 2013.

Lenovo said the new facilities will help the company bring more mobile devices to both Chinese and foreign markets, while also improving its supply chain. The sales revenue generated from the facilities will reach 10 billion yuan by 2014, and later reach 50 billion yuan within the next five years, according to the company's projections.

Lenovo, now the world's second largest PC maker, has been steadily expanding to compete in the smartphone, tablet and smart TV markets. Last year, the company established a new business unit devoted to the development of such products, while also breaking ground on a production center in Chengdu, China, partly meant for the eventual manufacturing of mobile Internet devices.

Many of the company's newest mobile products have gone on sale in China first, acting as a kind of testing ground, before arriving in foreign markets, according to analysts. For example, Lenovo has released several smartphones under its "Le" series in the country. It plans to sell the smartphones in emerging markets as well.

China has also become a major market for mobile devices, with the country already surpassing the U.S. in smartphone shipments, according to research firm IDC. Given Lenovo's extensive sales reach and strong PC business in China, the company shows major potential to succeed in the country, said IDC analyst Teck Zhung Wong.

Lenovo's share of China's smartphone market recently saw a major jump, moving up from 1.8% in last year's third quarter, to 9.1% in the subsequent fourth quarter, according to IDC. This made it the fifth largest smartphone vendor in the country during the fourth quarter.

"Lenovo's building of the R&D center seems to indicate they are serious about this market," Wong said. "Once they have success in China, this can make their expansion into other markets smoother."

Copyright © 2012 IDG Communications, Inc.

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