China’s Xiaomi logs record profit but flags chip crunch risk

TAIPEI — Chinese language smartphone maker Xiaomi on Wednesday reported file benefit for the April-June quarter as the sector’s second-largest smartphone maker snapped up marketplace percentage misplaced through home rival Huawei because of a U.S. crackdown.

Xiaomi’s quarterly earnings grew 64% at the yr to 87.79 billion yuan ($13.55 billion), whilst internet benefit jumped 84% year-on-year to eight.26 billion yuan. The smartphone maker warned, then again, that the continued world chip scarcity poses a problem to it and “all electronics makers” this yr.

“We predict we have now an excellent likelihood to reach world No. 1 in 3 years in response to what we accomplished relating to marketplace percentage ultimate quarter,” Wang Xiang, Xiaomi’s president, instructed newshounds on Wednesday. “We nonetheless see huge enlargement alternatives throughout Europe, Asia and Africa in addition to in our home marketplace.”

Wang additionally flagged uncertainties for the corporate’s trade for the following two quarters. “The present and ongoing chip scarcity would be the most important problem for all electronics makers for the second one part of 2021.”

Samsung and Apple, Xiaomi’s two key opponents within the smartphone marketplace, are affected by the unheard of world chip crunch. Apple mentioned it expects the chip scarcity would possibly irritate this quarter and may purpose an impact of $3 billion to $4 billion within the July-September length.

Xiaomi in the meantime has equipped aggressively and requested providers to organize parts for as much as 240 million smartphones for 2021, Nikkei reported previous. When it unveiled its newest high-end handset, the Combine 4, previous this month, the Chinese language corporate mentioned it objectives to surpass Samsung Electronics as the sector’s largest smartphone maker in 3 years.

Xiaomi overtook Apple because the second-largest handset maker within the April-June length, with 17% of the worldwide marketplace, simply moderately in the back of Samsung’s 18%, analysis corporate Canalys mentioned. Its shipments of 52.8 million devices had been up 83% from a yr in the past.

Quarterly earnings from out of the country markets used to be the perfect ever — 43.6 billion yuan, up greater than 81% at the yr. In another country gross sales contributed nearly part of Xiaomi’s general earnings.

Wang mentioned Xiaomi reached the No.1 place in Europe for the primary time within the April-to-June quarter, and used to be the largest smartphone maker in center and jap Europe for the 3rd consecutive quarter.

Xiaomi on Wednesday additionally introduced it’s going to spend $77 million to procure Deepmotion Tech, an independent riding instrument developer, because it boost up its construction electrical automobiles. Xiaomi has mentioned it’s going to spend $10 billion within the subsequent 10 years on its EV trade.

Its spectacular enlargement relating to marketplace percentage and benefit makes it the largest obvious winner from the autumn of Chinese language peer Huawei.

Analysts say Xiaomi has grabbed vital marketplace percentage from Huawei each at house and in a foreign country.

Huawei used to be in short the sector’s largest maker in 2020, however its world marketplace percentage is now simply 4% following a chain of business restrictions imposed through Washington, which cited nationwide safety issues for the strikes.

“In Western Europe, most effective 3 years in the past in 2018, Xiaomi had moderately greater than a 2% percentage, nevertheless it already grew to 9% ultimate yr and 14% within the first part of 2021,” IDC analyst Joey Yen instructed Nikkei Asia. “In Jap Europe and Russia, Xiaomi is already No. 1 up to now April-June length, and it maintains a powerful place in Asia.”

Yen mentioned Huawei’s fall contributed to Xiaomi’s fast upward push over the last yr and likewise proves that Xiaomi’s technique of introducing a large portfolio of goods, from price range to high-end telephones, has been a hit.

“Xiaomi unveiled the high-end telephones to spice up its emblem symbol, whilst it additionally will depend on the ones cost-effective telephones that it collaborates [on] with telecom operators to strengthen gross sales volumes,” the analyst mentioned.

On the other hand, it faces festival because it objectives to additional building up its marketplace percentage, analysts mentioned.

Archie Zhang, an analyst with Counterpoint Analysis, mentioned it’s going to be difficult for Xiaomi to cement its No. 2 place.

“Xiaomi’s upward push in Europe and Latin The usa in Q2 2021 used to be towards the backdrop of the provision scarcity of Samsung, which deploys maximum of its manufacturing capability in Vietnam, the place manufacturing used to be disrupted through the COVID-19 scenario,” Zhang mentioned. “As soon as the rustic’s pandemic is beneath regulate, Samsung’s cargo and marketplace percentage will have to witness rebounds globally.”

Further reporting through Lauly Li in Taipei

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