Lenovo to Build x86 Servers in Europe

Lenovo will manufacture some data center systems—including x86 servers—in a facility in Hungary to reduce costs and improve delivery times to customers in Europe.

Company officials announced that starting this summer, the facility in Sarvar, Hungary, run by longtime manufacturing partner Flex will build some x86-based servers, storage and networking equipment to complement the systems already being built in Lenovo’s home-country of China. Lenovo officials said the move will help shave up to five days on the delivery time of systems to customers in many European countries and lower freight costs that can be passed onto customers and partners.

“Transferring production to Europe is a strategic move for us, which will create tangible benefits for our customers,” Wilfredo Sotolongo, vice president and general manager of Lenovo’s Data Center Group in the Europe, Middle East and Africa (EMEA) region, said in a statement. “We believe that this will only enhance our capabilities in the enterprise market.”

Lenovo has been partnering with Flex for six years. The facility in Hungary already is being used to manufacture PCs, phones and ThinkServer systems, and also for repairing tablets. The site recently shipped its 5 millionth Lenovo PC for the EMEA region.

Lenovo is the world’s largest PC vendor, but it’s a worldwide market that has been in decline since 2012, which has battered not only Lenovo but other major PC makers. Lenovo has looked to broaden its product portfolio, and in 2014 spent almost $5 billion to buy IBM’s x86 server business and Motorola Mobility from Google.

The $2.3 billion acquisition of IBM’s low-end server business instantly pushed Lenovo into the top five lists of the world’s largest server makers, and the move has helped give its financial numbers a boost and to soften the blow from the contracting PC market. In the last three months of 2015, Lenovo’s PC Group—which includes PCs and Windows tablets—saw revenue fall 12 percent, to $8 billion. By contrast, revenue for the Enterprise Business Group—including servers, storage, software and services—grew 8 percent, to $1.3 billion.