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Lenovo Acquires Remaining Equity Interest in Mobile Handset Joint Venture

   

HONG KONG, December 20, 2005 - Lenovo Group Limited (HKSE:992; ADR: LNVGY) today announced the acquisition of the remaining 19.2 percent equity interest in the mobile handset joint venture it formed with Xoceco (Xiamen Overseas Chinese Electronic Co., Ltd.) at a cash consideration of RMB72 million (approximately HK$68 million) under a share transfer agreement. The joint venture, which is principally engaged in the manufacturing and sale of mobile handsets in China, will become a wholly-owned subsidiary of Lenovo upon completion of the acquisition. Lenovo currently owns 80.8 percent of the joint venture, which was formed in 2002. In the second fiscal quarter ended September 30, 2005, Lenovo's mobile handset business reported revenue of HK$1.1 billion, which had more than doubled from the prior year. Unit shipments in the period jumped 139 percent to more than 1.4 million as compared to the first fiscal quarter. Lenovo said the unit's performance was driven by increased ability to respond quickly to the fast-changing market and a stream of highly differentiated, innovative products, more than 80 percent of which were developed in-house.

"With our relentless commitment on product innovation and mobile handset research and development, our market share continues to increase, moving the Lenovo brand up to fourth-largest brand in China. This acquisition allows us to enhance our control and the overall competitiveness of our products through innovation, with the aim of continuously raising customer satisfaction," said Yuanqing Yang, Chairman of Lenovo.

Lenovo handsets are sold nationwide through extensive distribution network in China, the largest mobile handset market in the world. Going forward, Lenovo will continue to enhance its capability to develop and introduce industry-leading products, emphasizing faster time-to-market and closer ties with suppliers. Lenovo will also continue to develop its distribution channel and implement aggressive marketing strategies.

About Lenovo Group Ltd. Lenovo (HKSE: 992; ADR: LNVGY) is dedicated to building the world's most innovative personal computers. Lenovo's business model is built on innovation, operational excellence and customer satisfaction as well as a focus on investment in emerging markets. Formed by Lenovo Group's acquisition of the former IBM Personal Computing Division, the company develops, manufactures and markets reliable high-quality, secure, and easy-to-use technology products and services worldwide. Lenovo has major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina, U.S. For more information, see www.lenovo.com .

Contacts: Hong KongAngela Lee (852) 2516-4810 angelalee@lenovo.com

Beijing Jean Cai(8610) 5886 8912 caixqb@lenovo.com

New York Julie Gottlieb(914) 701-2876 jgottlie@us.lenovo.com