Lenovo and Xiaomi may be in for a legal dispute after the head of the personal computer giant’s smartphone business jumped ship to the smartphone maker on Thursday.

Why it matters: The move followed a leadership reshuffle at the world’s fourth-largest smartphone maker in late November in which the roles of as many as eight high-ranking executives were affected. Xiaomi ceded significant share in the domestic smartphone market to rivals last year, falling to 9% in the third quarter from 12% in Q2, according to market research firm Canalys.

  • Chang Cheng, former head of Lenovo’s smartphone unit, announced his departure from Lenovo on Dec. 31. He has more than 3 million followers on China’s social media platform Weibo and has openly criticized Xiaomi’s smartphone offerings, including a comment in March on founder Lei Jun’s Weibo post about the low-end Redmi Note 5 in which Chang called the phone a “bucket” in reference to its thickness.
  • Chang’s departure is seen as a blow to Lenovo’s underperforming smartphone business. Revenue for the company’s smartphone division dropped 7% year on year in the quarter ended Sep. 30.

Details: Lenovo said it would take legal action on Thursday, the day Chang announced he had joined Xiaomi.

  • The personal computer manufacturer said it has signed non-compete clauses with all of its executives and that it would seek to resolve disputes “within the legal framework” should there be any breaches, according to Chinese business media Yicai, citing a Lenovo spokesperson.
  • The Yicai report cited a source close to Xiaomi as saying that Chang left Lenovo without signing a non-compete clause and he was not paid any related compensation.
  • Xiaomi declined to comment when contacted by TechNode on Friday. Lenovo did not immediately respond to requests for comment.

Context: Chang joined Lenovo in 2000 as a research and development director at Lenovo’s laptop business unit.

  • He became the CEO of ZUK, a smartphone spin-off, in June 2015, and was appointed a Lenovo senior vice president.
  • Lenovo’s smartphone business has struggled to gain traction in recent years, even after it bought US-based handset brand Motorola from Google in 2014 for $2.9 billion. Its market share in China has remained less than 1% since 2017.

Writing about semiconductors and telecommunications.

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