Mainland technology giant Lenovo Group expects to maintain its production strategy, which depends far less on outsourced manufacturing compared with its competitors, amid cost pressures from an industry-wide shortage of key components. The world's fourth-largest supplier of personal computers said last week the cost of some components, particularly liquid-crystal display screens and flash memory, had gone up while the average selling price of personal computers continued to come down. 'This creates a challenge, particularly in our premium products,' said chief executive Yang Yuanqing. 'We will try our best to manage these [price] increases.' Chief financial officer Wong Wai-ming said the cost pressure might remain an issue over the next three to six months but Lenovo had no plan to outsource more manufacturing. The company's strategy includes a mix of in-house production, contract manufacturing and outsourcing to original design manufacturers (ODMs) in Taiwan for some notebook computer models. 'We're always evaluating our manufacturing footprint,' said Mr Wong. 'But a shift of production capacity to ODMs does not necessarily make the issue of component shortages go away.' Lenovo, which acquired International Business Machines Corp's personal computer business in 2005, has opted to do most of its own design and manufacturing. It has major facilities in Beijing, Huiyang, Shanghai, Shenzhen, Pondicherry in India and North Carolina in the United States. The firm has invested more than US$30 million in building manufacturing plants and order fulfilment centres at Baddi in India and Monterrey in Mexico to support requirements in those regions. JP Morgan analyst Charles Guo said Lenovo's sourcing strategy 'would be difficult to change' because it involved other matters. 'For instance, the majority of ThinkPad notebook designs are done at Lenovo's centre in Yamato, Japan,' said Mr Guo. 'ODMs are mainly used for consumer notebook models, which currently contribute very low volume for Lenovo.' The most opportune time to implement radical changes for the company's production strategy and gradually use ODMs more would likely be when volume shipments stabilise and grow on a broader scale, he said. Mr Guo said cost pressures on computer makers from component shortages would be alleviated in the third quarter and disappear during the fourth quarter.