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Xiaomi’s quarterly revenue fell nearly 10 percent as it grappled with a sluggish global smartphone market and weak consumer demand at home.
Mobile device sales fell 11 percent, dragging down business divisions that include smart electronics and internet services. The Beijing-based company recorded sales of CNY 70.5 billion (roughly Rs. 80,900 crores), slightly above estimates. But it posted a surprising net loss of CNY 1.5 billion (roughly Rs. 1,711 crores) for the quarter ended in September, reflecting writedowns of about CNY 3 billion (roughly Rs. 3,422 crores) in items such as investment losses. Adjusted net income, which excludes exclusions, beat analyst estimates.
China’s Covid Zero policy has sowed chaos throughout the country’s technology industry and supply chains, leading to a decline in economic activity. At the same time, demand for electronics is falling as shoppers react to rising inflation and slowing economic growth. Global smartphone shipments are at their lowest in years thanks to falling demand, however Xiaomi It managed to capture market share in Europe, executives told reporters on a conference call.
“The challenge in China is COVID, and the epidemic situation is still volatile,” said President Wang Xiang. “There is still room for growth in overseas markets,” he added.
Global smartphone sales are set to decline 2.9 percent next year after a 12.2 percent decline in 2022, Jefferies forecast this month. Xiaomi’s unit sales will decline this year and next before recovering slightly in 2024, Jefferies forecasts.
That’s partly because phones sold in recent years have been well-designed, Jefferies analysts including Edison Lee and Nick Cheng said in a November 9 note, leaving consumers with little need to buy new phones. They said the new models add a few innovations.
Analysts wrote that “the structural weakness is worse than expected”. The challenges are “complicated by the weakness of the economy.”
What Bloomberg Intelligence Says The decline in smartphone sales in China could extend into 2023, though shipment fell in September. batch of iPhone 14 litersIt may be a one-time vulnerability and it looks like the Android vulnerability will be overwhelming in the following months. Continued declines in corporate PC shipments suggest business outlook remains cautious post-lockdown — Stephen Tseng and Shawn Chen, BI analysts.
Xiaomi reported its first drop in sales in the first quarter, followed by a 20 percent drop in sales for the June quarter.
Even world leaders were not spared. Samsung Electronics, the world’s largest maker of phones, displays and memory, described lower phone sales in China as a drag on its component business. Apple Inc. expects Production of at least 3 million iPhone 14 units is less than originally expected this year, people familiar with its plans said, mainly due to weak demand for lower-cost versions of the model.
Xiaomi shares have lost half their value in the past year, leaving the electronics giant with a market capitalization of about $31 billion. However, it has fared better than some of its domestic competitors in the phone industry, such as Oppo and Vivo, thanks to its international footprint and distribution.
Co-founder and CEO Lei Jun has teased Xiaomi’s electric vehicles for future growth, pledging a $10 billion (roughly Rs. 81,780 crores) investment and setting up a separate company for the venture. Xiaomi has made progress in this area, Wang said, without elaborating.
However, that project will take years to bear fruit, leaving the company dependent on a recovery in consumer spending on electronics to revive its flagging fortunes. Android device sales, as Xiaomi battles Samsung in international markets, are not expected to recover soon, especially in China.
© Bloomberg LP 2022
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