Lenovo Group Ltd., China’s original computer giant and the world’s largest PC maker, announced the launch of a $500 million USD startup fund, as the company seeks to diversify their business amid stagnating smartphone and PC sales.
The fund, which will be managed internally by Lenovo Group, will search out investments in the artificial intelligence, robotics and cloud computing industries, the company’s vice president He Zhiqiang said at an event in Beijing on Wednesday.
Lenovo joins a handful of Chinese smartphone vendors looking to diversify outside of hardware in an attempt to chase profitability in a flat market. Both Lenovo and Xiaomi dropped from the top five smartphone vendors as of Q1 2016, according to a recent study from IDC.
Xiaomi has taken on a similar strategy, investing in up to 50 companies, up to 20 of which remain in stealth mode, with no current public exposure.
Lenovo has already invested $100 million USD in 30 companies according to their website. Current investments are mobile focussed, including smart home devices and games. The new investment appears to seek out more complex back-end technologies, that could potentially help the company diversify their core business.
A majority of Lenovo’s revenue is still generated from their personal computer business, though the company has acknowledged the rapidly slowing growth in the sector. In August 2015 they cut five percent of their non-manufacturing workforce as part of a $650 million USD cost cutting program.
The company recorded losses in late 2015 for the first time in more than six years, though returned to profitability according to their Q3 earnings reported this February.