Good morning and good evening. Welcome to Lenovo's Earnings Webcast. Thanks to everyone for joining us. This is Jenny Lai Vice President of Investor Relations. Before we start, let me introduce our management team joining the call today. We have Lenovo's Chairman and CEO, Mr. Yang Yuanqing; Corporate President and COO, Mr. Gianfranco Lanci; Group CFO, Mr. Wong Wai Ming; President of Data Center Group, Mr. Kirk Skaugen; and President of Motor, Mr. Sergio Buniac. We will begin with a presentation shortly. And after that, we will open the call for questions. Without further ado, let me turn the call over to Yuanqing. Yuanqing, please.

Hello, everyone. Thank you for joining us. I'm pleased to talk about our record-setting second quarter performance and our vision for further growth in today's fast-changing world. Despite the challenging environment, last quarter, we delivered a record quarter performance in both revenue and profit. Revenue reached a new high of USD 14.5 billion, growing over 7% year-on-year as all of our core businesses delivered a year-on-year growth for the first time in 6 quarters. Profit showed even stronger growth with pretax income and net income both up over 50% year-on-year. Pretax income reached USD 470 million, and the net income reached USD 310 million. In addition, the top 3 credit rating agencies granted Lenovo strong investment-grade rating, further strengthening our ability to finance our growth. In our Intelligent Device Group, PC and Smart Devices delivered another historic quarter. Revenue up 8%, while pretax income improved 18% year-on-year, both set new records. Although market is shifting to consumer segment, we still maintained our industry-leading and record profitability of 6.3% through excellent and high-efficient operations. And we returned to 1 in PC with almost 24% market share. Our focus in high-growth and premium segments continued to drive strong growth. Despite the currency volatility in Latin America, our Mobile Business revenue grew 39% quarter-to-quarter and returned to year-on-year growth as we continued our strong recovery from the impact of COVID-19. Besides further solidifying presence in our stronghold market like Latin America and North America, we have accelerated our development in Europe and Asia Pacific and saw clear results. In addition to our strong product portfolio, we launched the razr 5G foldable smartphone and the Lenovo Legion Gaming phone. And both have been well received by market. In Data Center, we again saw double-digit revenue growth with improved profitability year-on-year. Our Cloud Service Provider segment continued to grow over 30% year-on-year, with a strong growth across all geographies. Particularly thanks to years of investment in in-house design manufacturing, we displaced the major ODMs to become the motherboard and system design partner to a top cloud service provider. We have also expanded the capacity of our factory in Monterrey, Mexico to serve data center customers across the Americas. In Enterprise and SMB segment, our revenue stayed close to flat year-on-year, but we did outperform the market. Our focus continued to drive double-digit growth year-on-year across Software Defined Infrastructure, Storage, Software and Services segments. Even more, we recently announced the exciting partnership with SAP. Our TruScale Infrastructure-as-a-Service combined with SAP's HANA Enterprise Cloud enables customers to keep their sensitive data on-premises and secure while enjoying the flexibility of pay-as-you-go consumption model. We already see strong customer response to this offering. Our service-led Intelligent Transformation continued to make solid progress with Smart IoT, Smart Infrastructure and Smart Verticals revenue, each growing by strong double digit year-on-year. In terms of service, our Attached Service, Managed Service and Solutions Service also continued faster growth. Particularly, DaaS, Device as a Service, tripled its total contract value year-on-year. Overall, Software and Services revenue grew to a new record of over USD 1.2 billion, up 39% year-on-year and now accounts for 8.5% of our total group revenue even as total revenue increases. Our E-commerce revenue also grew by over 40% year-on-year. I have talked about the long-term growth of the total technology market in the new normal for 2 quarters. PCs and tablets are now one device per person. And the cloud infrastructure demand are growing rapidly because of the work, learn and the play-from-home economy. We believe the total PC market will grow by around 25 million units and reach very close to 300 million units in just the current calendar year. And both device and cloud infrastructure market growth will continue for the long term to meet the increasing demand of our valued customers. We are committed to further improving our supply going forward. As the pandemic changes customer behavior, Lenovo continues to innovate and lead in this period of rapid change. Last week, we demonstrated our results and vision in innovation at our annual flagship event, Lenovo Tech World. At the client device level, we are expanding the idea of a computer to our computing everywhere with new form factors. In edge, we offer both hardware and our own AI-enabled edge computing platform. In cloud, we can design, install and maintain public and private cloud as well as provide multi-cloud management solutions. And we are extending our Infrastructure as a Service to attach Platform as a Service and Software as a Service. In network, we now can file more than 1,000 5G essential patent applications and implement 5G networks and applications with network cloud convergence, virtualization and network slicing technologies. Finally, with all these technologies, combined with intelligence like machine learning and artificial intelligence, we generate insights and provide solutions to customers of various industries and drive intelligent transformation. I believe that technology has never been so essential to humanity as it is today. Customers have new requirements to meet in this new normal. And our success in meeting these needs is demonstrated not only by our strong results this quarter but also by how our service-led transformation propels our growth well into the future. Thank you. Now let me turn it over to our CFO, Wai Ming. Wai Ming, please.

Thank you, Yuanqing. I will now take you through Lenovo's financial and operational performance in the second quarter fiscal year 2021. Next chart, please. The group continued its record performance in the second fiscal quarter. We set a number of performance records whilst still navigating the ongoing pandemic. Our revenue increased 7% year-on-year to reach all-time high of $14.5 billion. And all 3 business groups recorded positive year-to-year revenue growth. Resilient and strong growth was achieved as a result of structural changes in demand of computing device, which include e-learning, work from home, play at home and cloud. This also resulted in a gain in market share during the quarter. The group's gross margin improved 0.2 points quarter-on-quarter, thanks to high-growth and premium segments. The Software and Services and E-commerce grew their revenue strongly by 39% and 42%, respectively, year-on-year. Their high margin rates continue to support our strong profit trajectory. The segment profitability has improved, including margin rate expansion in consumer, Chromebook, E-commerce and Gaming segments. However, a higher COVID-19-led logistic cost caused a moderate year-on-year decline on gross margin. Our E to R ratio was reduced by 1.2 percentage point to 11.6% in the quarter, a result of our disciplined expense control and operational efficiency. Next chart, please. Our business group total pretax profit grew 15% year-on-year to reach a new record of $654 million. During the quarter, we recognized a fair value gain of $104 million on strategic investments netted by $53 million provision for intellectual properties in our unallocated headquarter and corporate expenses. Our profit performance has reached a new milestone. Profit attributable to equity holders increased by 53% to all-time high of $310 million with consistent improvement across all 3 of our business groups. The basic earnings per share came in at USD 0.0259, up 53% from the previous year. The Board of Directors declared today an interim dividend of HKD 0.066, representing an approximately 5% increase on the interim dividend paid in the last fiscal year. Next chart, please. We lowered our net debt by $390 million, thanks to the strong cash flow generated from our operations. And our finance costs reduced further by $45 million or 33% year-on-year. In October, we received strong inaugural investment-grade ratings from 3 leading credit rating agencies and successfully completed the first 144A issuance of $1 billion 10-year senior notes. We will use the process to retire a portion of the perpetual securities and unsecured notes in an effort to improve the efficiency of the group's liability management while further reducing our financing costs and extending our debt tenure. Inventory days improved sequentially by 2 days, thanks to strong demand. This year-on-year increase of 11 days was due to our strategic buy-ahead actions to secure critical parts. Next slide, please. PCSD revenue grew by 7.6% year-on-year to $11.5 billion in the quarter. Pretax margin expanded by 0.6 percentage points to a record of 6.3%. Pretax profit increased by 18% year-on-year to $723 million. These record-breaking achievements in the second fiscal quarter are encouraging as peak of seasonality normally occurs in our third quarter. I would like to take this opportunity to discuss our pretax margin for PCSD as the process of managing margins is dynamic. We have enjoyed strong scaling benefits, and we have the most competitive profile in each of the segments we are servicing. Even the consumer and Chromebook sales, which traditionally carry lower margins, we have focused on higher-margin projects to optimize and improve their segment profitability. For high-margin products such as Software, Services, E-commerce and high-growth segments including Thin & Light and Gaming, we have doubled down on our investment to boost the contribution of these segments and, hence, gain market share. We are confident in maintaining the PTI margin of about 6% on a sustainable basis. Next chart, please. Thanks to rebound in market demand, the team's continued efforts in expanding portfolio and carrier ranging, MBG average selling prices improved, and the business group delivered strong revenue recovery, resulting in a 39% sequential growth, returning to a revenue scale of $1.5 billion, up 1% year-on-year. The sales recovery helped to narrow MBG losses before taxation by $28 million quarter-on-quarter to $22 million, and the business was now cash flow positive. The business was impacted by higher freight cost, which showed a decline in profitability by $30 million year-on-year. We expect the business will continue to grow and resume its profit growth track going forward. The business will continue to execute its portfolio expansion to increase global market share. Its 5G-for-all market strategy is starting to bear fruit. With our flagship razr 5G phone launches, our 5G products now span across all price segments, which helps to drive ASP expansion. The revenue contribution from 5G models more than double quarter-on-quarter. The business will continue to execute its strategy while preparing for more aggressive carrier penetration. Next chart, please. Our DCG continued to capitalize on cloud demand and achieve premium to market growth during the second quarter. With strong momentum and continued client diversification, Cloud Service Provider, or CSP, revenue growth accelerated to 34% year-on-year. The prospect for CSP has been promising, thanks to its richer mix of solutions and design wins supported by our in-house design and manufacturing. Enterprise and SMB, or ESMB, segment continued to outperform the market. Our revenue posted a small year-on-year decline of 1.7%, a solid performance compared to the sluggish sector. We achieved this superior performance based on the double-digit growth in Software Defined Infrastructure, Storage and Software and Services. DCG business continued to improve its operational result by $11 million quarter-on-quarter and $4 million year-on-year to a pretax loss of $47 million. The group efforts in product allocation and development of alternative platforms, the availability of high-end system as well as storage solutions have started to pay off. With our continued work in more margin wins for profitable projects and advanced configurations, DCG is on track to drive long-term growth and profitability over time. Next chart, please. The invoiced revenue of Software and Services surpassed $1.2 billion in the second quarter with a 39% year-on-year growth, whilst deferred revenue grew 26% to nearly $2 billion. Since the outbreak of the pandemic, there is a surge of interest in our service capability, as clearly reflected in the strong new contract pipeline we have built across Attached Services, Managed Services and Complex Solutions. Among all, DaaS and Infrastructure as a Service are gaining significant momentum. The recent DCG partnership with SAP was an important landmark deal highlighting the potential for Infrastructure as a Service. Next chart, please. Looking forward, the dynamic shift in PC demand will continue to create tailwinds for e-learning, work from home, play from home, cloud infrastructure and 5G. We are optimistic that these long-term structural trends could enlarge the addressable market for PCSD and cloud infrastructure as well as accelerate the development of 5G services. Our PCSD business will continue to drive premium to market revenue growth through investment in the high-growth and premium segments. We are confident to increase supply to meet the strong demand. We'll continue to build capabilities to drive sales growth in the Software and Services business and expand E-commerce based on this well-established infrastructure. For the MBG business, the group will invest in product innovation including offering new and differentiated 5G smartphones. MBG will seek to strengthen its competitiveness in tighter markets to grow at a premium to the market and improve long-term profitability. For the DCG business, the group aims to deliver premium to market growth and improve profitability. For its Cloud Service Provider business, the group's new design wins will expand its wallet share with existing accounts by leveraging its unique strength in the global supply chain and worldwide reach while expanding its portfolio with new product solutions and platforms. Lastly, in the Enterprise and SMB segment, the group will grow its high-margin service attach rate, upsell premium services and expand its hybrid cloud solutions to drive profit improvements. Thank you. And now we can take your questions.

Thank you, Wai Ming. Now we will open the lines for questions, and this session will be in English only. [Operator Instructions] Operator, I will now turn it over to you. Please give us your instructions.

[Operator Instructions] We have the first question from the line of Howard Kao from Morgan Stanley.

Congratulations on the quarter. So my first question is on PC. So while you mentioned in your prepared remarks that this year you guys are expecting PC demand to be close to 300 million units, but I think most investors are curious about your outlook for calendar year 2021. If possible, could you comment about -- one is on the total market, whether you guys see the growth rate to continue in calendar year 2021. And also by subsegments, if you guys can comment about the outlook for PCs, for example, gaming, educational, enterprise as well as traditional consumer. And I have a follow-up.

Thank you, Howard. So I would suggest Gianfranco Lanci to answer this question. Gianfranco?

Hello?

Yes.

Can you hear me?

Yes.

As we said, we see 2020 is probably going to be, as YY said, the 25 million additional unit in terms of total available market, right? And it's coming from more or less minus 5 million in Q1 and then plus 10 million for the following 3 quarters. And the market will be probably between 295 million and 300 million. If I look at 2021, in my -- in our opinion, we see additional 15 million to 20 million TAM growth coming from, for sure, a big growth in Q1 because last year -- this year, Q1 was the starting of the pandemic in most of the world, right? And then I think it's going to sustain for Q2, Q3 until Q4. Assuming something in the range of 300 million this year, I think 6% to 7% growth in 2021. Coming from -- we will continue to see a very strong demand on education and not only -- let's say, not only U.S., not only Japan, but in most of the countries. Gaming, I think, will continue to grow because its consumer, again, I think we will continue to see similar growth that we have seen in 2020 in 2021 on this segment. The only -- I think the only segment that is probably going to show a very moderate growth is Enterprise. At least I'm not particularly optimistic in beginning of the year, Q1, Q2. And then probably, we will see Enterprise starting to invest again in Q3, Q4 next year. So overall, probably a very small growth or maybe more or less no growth. But education, gaming and consumer, I think we will continue to see something similar to this year. And this is why, in our opinion, 15 million, 20 million additional units in terms of TAM is what we predict for 2021.

Okay. So my follow-up is on your remarks, regarding the strong growth that you guys expect in the educational space. So there are a lot of PC brands, not only Lenovo, but basically, everyone is expanding their Chromebook product portfolio. Just in regards to competition, how do you guys see competition for Chromebooks going into 2021, whether that will drive some kind of ASP erosion on a year-on-year basis?

So Gianfranco?

What we see -- no, no. Yes. But frankly, speaking, when you look at -- okay, the number of player on Chromebook is more or less always the same. And I really don't see a lot of new player coming. There are 4 to 5 players in the Chromebook space, and I don't see additional players coming. Not only, but if I look at the evolution of Chromebook during the last 3 quarters, it's -- the ASP is going up mainly for 2 reasons: because there is a part that is related to education; but there is also very good growth, talking about Chromebook on consumer. And the average selling price of consumer is very different. But even on education, we have seen $10 to $20 improvement in terms of average selling price. On top, we will see probably mid of next year or later next year 5G Chromebook coming. And so with a good 5G connectivity or 4G connectivity because people, they need to be connected, always connected, so I'm not afraid of any deterioration of the average selling price of Chromebook.

Yes. So Gianfranco, so although -- so we -- our Chromebook increase is significant last quarter, but we still shipped much less than our competition, so key competitors. So if you can see our -- if you see our AUR, so actually, it's much better than our competitors. So we are less impacted by the Chromebook and the low-end product. So that's one thing I hope you can mention -- you can pay attention to. So actually, we are more focusing on the -- so we know the market is shifting from enterprise to consumer. But Lenovo, we are more focusing on the high-end products in the consumer like Thin & Light, like Gaming PC. So with much higher AUR, definitely margin is high. So that's the first part that I want to mention. And the second point is, when market is shifting to the consumer, so Lenovo, we are more focusing on improving our expense to revenue. So we know to sell consumer product is different from to sell enterprise product. So if you don't have the efficient expense to revenue, you will not have the good margin in the consumer. But if you can see our E to R ratio, we've improved significantly last quarter. So that even in the low-end product, Chromebook, tablet, we still can deliver a very decent profit. So probably you cannot imagine. So our tablet profit, let's say, pretax income ratio, it's even higher than our PC segment -- our entire PC segment. So that's just $100, $200 product category. So we still can make very decent margin. The third point is, in the past, we sell only hardware parts. But now we are -- we more emphasize the service. We sell more hardware with attached services. You know the service definitely, so the margin and the profit is much higher than hardware. So with these 3 focus on shift, so we are driving the better margin and the PTI, so particularly PTI. So if you look at the last quarter, right, so we -- our PTI in the PCSD was historical high, so 6.3%. So we believe, so Gianfranco, at this level, we can maintain this PTI ratio, right?

Yes.

Our next question comes from the line of Jerry Su of Crédit Suisse.

I want to follow up on the comments about the gross margin. I think in the prepared remarks, you have mentioned that the past quarter's gross margin was impacted by higher mix coming from consumer and Chromebook. Could you give some color about what is the mix coming from these 2 segments in the last quarter? And how do you view that -- how the mix is going to change into the third quarter this year? And how will that impact your overall gross margin?

Gianfranco?

You mean an impact positive or negative?

Well, I think on a group level, I think whether it's going to be positive or negative, yes.

Well, I think we have been very, very clear that we don't see any deterioration of the margin coming from the different mix for a few reasons. One, as YY already said, when you look at Chromebook, our mix of Chromebook compared to the rest of the market is relatively small. I can give you a very simple example because it's part -- you can find them from market researchers. I'm not disclosing anything. I think we shipped 1.7 million last quarter Chromebook. One of our larger -- largest -- our largest competitor, they ship 3.7 million or something like that. So you can imagine -- and we shipped more than 19 million. So the weight of Chromebook, 1.7 million out of 19 million, it's less than 10%, right? And we've been able to improve ASP because we look at it deal by deal, and we pay attention on what is the marginality of the different deal. So the mix coming from -- the impact there coming from Chromebook is almost irrelevant. And probably compared to the past, we have seen a good improvement on both margin and AUR on Chromebook. Consumer, same story. Now we are running consumer at profitability that is very close to the average profitability of PCSD, very close to the 6.3%. Why? Because, again, our mix of consumer, we are not focused on low end at all. It's mainly coming from Gaming, Thin & Light or what we call, let's say, prosumer. But that is still part of consumer because it's mainly coming from consumer in terms of addressing this new segment. That is the segment of people working from home. So in terms of margin, I think we have been able to -- and I think when I look at the margin compared to last quarter, compared to last year, there is no deterioration at all. And when I look at this quarter, so Q4 calendar year or Q3 financial year, the trend is exactly the same as Q2, last quarter. The only small impact but we have been able to absorb the impact coming from a better margin on the product is logistics. Logistics continue to be more expensive than before. But this is already from, let's say, Q1 and just after the February, March. And we need to move things sometimes by air due to the supply shortage. So logistics is still more expensive than 1 year before. But when you look, we have been able to compensate with better margin on the product because you don't see the deterioration of the margin coming from logistics.

Okay. And then a follow-up question is, I think you also mentioned about the DCG expanding a factory in Mexico. Can you provide a little bit color about what's the capacity or -- capacity in this area as a percentage of the overall group's capacity and also what kind of service that is expected to be in that facility?

Kirk?

Yes. Hi. Can you hear me okay?

Yes.

Great. Yes, so thank you for the question. I think we're excited about the growing customer design wins we have in North America as well as in the Cloud Service Provider space. And while some of our competitors had significant issues supplying through the -- through this COVID pandemic into North America, we just had our Tech World, and you heard customer like DreamWorks, who we just signed a 5-year relationship with, say that they were able to deploy a supercomputer flawlessly through the pandemic. And so the Monterrey, Mexico facility expansion is going to be a dedicated expansion of our factory. We're moving into a second building. It's up and operational. And we've started shipping our first racks into some of the Tier 1 cloud service providers. So I think this is a good sign, I think, for the market that we're confident in the growth both in North America for Enterprise/SMB as well as in the cloud service providers. And they've asked us to increase the capacity based on future orders that we've had. Over time, we will not just do the system development but also do motherboard development in multiple geographies. So again, I think with North America being the largest data center market, it's also our strongest growing market right now. So we're excited that, that plant is now fully up and operational. So it's a significant capacity expansion.

Next question comes from the line of Sebastian Hou from CL Securities.

So I think the first question I have is on the debt. Total contract value grew triple digits, which is a pretty impressive result. So I'm curious about what's your current expectation for the invoiced revenue still tracking about USD 1 billion for this fiscal year. And also, if we look from the group company perspective, what's the adoption rate over such subscription business model now for both the PCSD and DCG business? And what's the reasonable target, say, in 3 years from now?

So Gianfranco, would you like to answer the first?

Yes, YY. No, DaaS, I think, what is the reason, I would say a couple of -- one is, for sure, we are probably one of the few company today able to offer a worldwide coverage in terms of DaaS. So for large enterprise, I would say Fortune 100 but not only Fortune 500, with the operation all around the world, there are very few people today able to offer a DaaS solution that is able to cover the entire world. And of course, the other big reason is that people, they start to realize, like in other businesses, if you take car or other things, it's very similar. The opportunity to change after 2 to 3 years your installed base, just paying a monthly fee and without any asset cost, it's a very good solution. Because you have a new installed base every 3 years, so you have the service covering for the 3 years whatever you need. And the last thing is that we started to address DaaS also for the small, medium business partially through the -- mainly through the channel. But -- so today, we have a solution on DaaS that is going from very large enterprise down to, let's say, medium business. In terms of prospective, in my opinion, we have seen that it's growing 40%, 50%, 60% the entire service revenue, right? Our revenue -- service revenue is growing more or less in the range of 40%, now very consistent during the last probably 4 to 5 or 6 quarters, more than 1 year, almost 2 years. And we reached $1.2 billion as a company this quarter. And I think that very soon, it will represent 10% of our total revenue and, in my opinion, between 3 to 5 years, can represent probably 20% of the total revenue.

Thank you. Thank you, Gianfranco. So Kirk, would you like to add something on our TruScale, particularly the deal with SAP?

Sure, YY. So we're extremely excited, as we announced just recently at Tech World with the CEO of SAP, that their new HANA Enterprise Cloud customer addition will be available now using Lenovo TruScale. So TruScale is our as-a-service brand that does on-demand, pay as you consume metering and enables you to get cloud-like economics but be able to have that hardware located on your premise either for security or for your own data requirements. So this was a significant commitment by SAP to both TruScale and as a service, where they'll be enabling that to their customers to support the new on-premise HANA Enterprise Cloud. Previously, we had won many of the Tier 1 cloud providers as SAP moved to the public cloud. So we're seeing TruScale as a great example there, and SAP is just another example of the momentum we have there. Thank you.

Yes. So we -- I think the top on-prem data center or Infrastructure as a Service will be Lenovo's focus there for a long time. So that will help us to drive this service-led transformation. So -- because it's part of our data center as a service, so it will not help us to shift the customer from the transactional customers to subscription customers. But also that will give us the opportunity to attach more services and parts and such. So that's why I think for this kind of business, there is a very bright future. So that can help us to drive not just the growth but also profitability improvement.

I have a follow-up. Is that with the TruScale offering on the enterprise IT solutions and also more in-house motherboard design to win more CSP business, also lower cost, these all thanks to pretty margin-accretive strategies. So how do you quantify the profitability enhancement target? Let's say, within what time frame can the DCG business at the pretax level achieve breakeven?

Yes. So I think...

Go ahead.

Right now, we feel very positive that we're -- especially when you look at Intel's results and as we talk to some of our other suppliers, that we're growing at a significant premium to market and likely a double-digit or higher premium to market. And I think the confidence we have in our top line growth is driven by a few things. Number one is we're very well balanced now between our geographies. If you look at China versus rest of Asia versus Europe and the Americas, we have a pretty decent split of almost 1/4 of our business in each. Secondly, we're expanding pretty rapidly into the storage market after we had our announcement and our joint venture with NetApp, so significant premium relative to what, I think, you're hearing from the analysts reporting the overall storage market when we're growing the numbers that we've been talking about of 15% in storage and 22% in hyper-converged. So that's feeling quite good. But we're really trying to balance this double-digit growth at a premium to market versus just continuing to improve our pretax each and every quarter. So that's really our -- what we're trying to drive as commitment to the market is how do we grow double-digit premium to market and how do we continue to improve pretax each and every quarter. So the reason we're exposing you to the 4Ss, SDI, Software, Storage and Services, is that's where we're really getting decent attach on profit. And as you said, as we now win some of these motherboard designs for designs all the way out there now that are going to be in 2022 and beyond with next-generation Intel and AMD silicon, that's also helping us improve our margin because we're -- we started out as a system integrator, putting together other people's systems into racks, that we did what they call copy exact motherboards, where we would take the motherboard from someone else and manufacture it. And now we're actually becoming the design partner, where other people will be paying us a royalty on the boards to become a second or third source to the Tier 1s. So this is something that, hopefully, you've been tracking over the last several years has been a consistent improvement, both where we're gaining share, we're getting the number of customers, and we're gaining their confidence to do more and more of their products. And lastly, I think in Cloud Service Provider, we've said this consistently over the last several quarters, but we're doing Intel now and AMD. We're doing server now and adding storage. We're not just doing motherboards and systems, but now we're doing motherboard design and systems. And then our services attached across the board is increasing double digits from a penetration rate for all our premium services as well. So I'm confident we can continue improving PTI. Relative to exactly when, I think we're just going to continue to drive double-digit premium to market and improve PTI ideally every quarter as we go forward.

So to add something here, so for our DCG business, we are focusing not just in short term but also the long term. So in short term, I think the most important thing for us is building the foundation -- building the competitiveness, definitely. So we understand the market is shifting from enterprise/SMB to the cloud. So if we cannot address the CSP, we cannot make money from the CSP segment. So we will not be competitive in that market. So that's why we are building the in-house design and manufacturing capability for motherboard all the way to the system integration. So I believe we are in a better position than our traditional competitors like HP and Dell. They're just focused on the enterprise and the SMB. So I said a couple of times, so this mix is similar to the consumer PC and the commercial PC mix. Consumer PC has less margin. But if you don't play in other segments, you will not have the scale. If you don't have scale, you will not have the cost competitiveness or efficiency. So consumers give you the scale. Commercial give you the profitability. So it's similar in the Data Center business. If you don't have the [CFD], so you will not have the scale. Now if you -- but definitely, we can make a better margin from the enterprise with stronger in-house design and manufacturing capability. So that's why I think we are in a better position than our traditional competitors in that space. Secondary, so the data center as a service, so particularly on-prem data center as a service, so you could say that's on-prem private cloud or on-demand private cloud. So if you believe that the public account would have the bright future, you should think this on-prem, on-demand private cloud should have the bright future as well. We should make better margin in the future as well because most enterprise customers, they would not shift all their infrastructure to the public cloud because of the data security and application security-ish. So the hybrid cloud will be the dominant business model over time. But definitely, enterprise customers also want to enjoy this kind of pay-as-you-go business model. And also, we believe if more customers start to use this model, we can make more money from this kind of business.

Our last question comes from the line of Nam Hyung Kim of Arete Research.

This is Nam from Arete Research. I have one question for server and one question for mobile. This year, local players in China, such as Inspur and others seems taking enterprise server share from U.S. OEM such as HP and Dell. So Lenovo is a Chinese company with a global footprint, I think you have a good opportunity in China market. So can you update your China business situation and plan? And also, when do you expect the global enterprise server demand to recover? And then second question for smartphone. Now I feel like Lenovo try to refocus on scale, not only profitability in Mobile Business. In the past, you focused more on profitability then market share, like focusing on more mid-range and low-end segment and targeted market. And are you changing your strategy to move to a more premium segment and additional region like Europe? So any update on your Mobile Business and strategy would be great.

So probably I would ask Gianfranco to answer the second question first. So Kirk, you can prepare for the first one.

Yes. So I mean to be very clear, our main focus is still profitability. And so now that said, we are seeing -- we are entering in the previous phase, we launched the razr. And now with 5G also coming, we are seeing an improvement in our AURs. We grew 5% year-over-year, 10% quarter-over-quarter. We expect this fiscal year the AURs will keep growing. We are also expanding ranging of our products across many carriers, what is driving growth in additional markets like Europe, Asia and even India. I think as we get more competitive, we are proving to be able to play globally. What is also going to help is when we recover in main -- in core markets like Latin America, North America. So main focus were stability. We are improving our mix, not significantly, around 10%, 15%. That means we are a little more into the premium side of the market without deviating from our strategy. And we are seeing growth from other regions, including Europe, but not -- also to include like Asia and all other markets, giving a better execution, increased ranging and growth of 5G. Our 5G doubled quarter-over-quarter on our mix and expect over the next 6 months to double again from where we are today.

Yes. So our Mobile Business strategy is very, very clear. So as a first step, we need to turn around this business to make it a healthy business. So we achieved that actually a couple of quarters ago. But unfortunately, because of the pandemic, our business was impacted significantly. So we lost a little bit of money. But fortunately, last quarter, we significantly reduced the loan. And we are very optimistic in the current quarter. So we will try to go back to norm. But after we achieve the first step, so for the second step, we will drive the profitable growth. To drive the profitable growth, so while we will continue to maintain our position in Latin America and North America, we will pursue the growth opportunity in Europe and the Asia-Pacific market. So that's about our Mobile Business strategy. And also, so we will drive the product, the portfolio from mid-end to the high-end side. So with the razr and the Gaming phone launch, so we are more confident on that. So Kirk, please.

Yes. I think -- well, first of all, if you look at the overall TAM over the next several years, we think it will be roughly 6% or greater TAM as we go into the next fiscal year out through the middle of the 2020s. So I think that the demand, as we all know, for data is out there. And the movement to the edge and where data get computed will drive a nice 6% or higher data center TAM growth. In China specifically, we saw high single-digit growth. And so I think we're definitely growing. We're taking smart share. I think some of the deals in the Tier 1s are just really negative profit, and we're not necessarily engaging in those today. We're taking smart share, we can improve profitability while growing with the market, and then -- or greater than market. And then in storage, with our NetApp JV, we're growing at a significant premium to market as well. So I guess it's the balance of both server and storage growth as we look at China and the balance of smart share growth but growth with profitability, not just for growth for top line revenue's sake.

Thank you. Thank you, Kirk. We thank you very much for joining today's call, and that is our last question. Meanwhile, if you have any further questions, please feel free to contact us directly. The replay of this webcast will be available in a couple of hours on our Investor Relations website. Thank you again for joining us. Bye-bye now.