As leading PC makers try to reduce their reliance on manufacturing in China, they sometimes expand production capacity in unexpected places. Lenovo Group said on Thursday that it would build a PC and server assembly factory in Saudi Arabia that will primarily serve markets in the Middle East and Africa. The project is backed by a $2 billion investment from Alat, a subsidiary of Saudi Arabia's Public Investment Fund (PIF).
The PC and server assembly plant in the Kingdom of Saudi Arabia (KSA) will be quite large: it will employ thousands of people and produce millions of PCs per year when it comes online in 2026, according to the company. Lenovo also plans to establish local research and development (R&D) operations "for fully end-to-end 'Saudi Made' products," which possibly implies tailoring products to local market needs. At the same time, a $2 billion computer assembly factory is a large industrial facility potentially with huge capacity. Without a doubt, this will be one of the most extensive high-tech facilities in the region and one of the major computer plants in the world.
The factory should significantly boost Lenovo's footprint in the Middle East and Africa, which will be instrumental to the company's growth as these markets are expanding rapidly. In addition to the factory, Lenovo will establish a regional headquarters in Riyadh, serving the Middle East and Africa.
By building a manufacturing facility that makes servers in Saudi Arabia, Lenovo will evade U.S. restrictions on supplying high-performance hardware for AI and HPC applications to China. As a result, it will boost its server production capacity without relying on plants located in Asia. For Saudi Arabia, building one of the world's largest PC and server manufacturing facilities is an instrumental way to diversify its economy beyond oil and modernize the country, which aligns perfectly with the country's Vision 2030 project.
"Through this powerful strategic collaboration and investment, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in KSA and the wider MEA region," said Yuanqing Yang, Chairman and CEO of Lenovo. "We are excited to have Alat as our long-term strategic partner and are confident that our world-class supply chain, technology, and manufacturing capabilities will be a benefit to KSA as it drives its Vision 2030 goals of economic diversification, industrial development, innovation, and job creation."
Lenovo already has production facilities in Argentina, Brazil, China, Germany, Hungary, India, Japan, Mexico, and the USA. By building a $2 billion production facility in Saudi Arabia, the company further increases its diversified global manufacturing footprint to remain the world's largest maker of PCs.
