{"id":540788,"date":"2021-11-24T07:07:44","date_gmt":"2021-11-24T05:07:44","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=540788"},"modified":"2021-11-24T07:07:44","modified_gmt":"2021-11-24T05:07:44","slug":"chip-shortages-wallop-xiaomi-phone-sales","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/540788\/chip-shortages-wallop-xiaomi-phone-sales\/","title":{"rendered":"Chip shortages wallop Xiaomi phone sales"},"content":{"rendered":"

Xiaomi Corp recorded its slowest pace of quarterly sales growth since early 2020 after supply chain mayhem choked off the flow of vital components and rivals like Apple Inc eroded its market share.<\/p>\n

Shares in China\u2019s largest smartphone maker slid more than 5% in Hong Kong to their lowest since September 2020, reflecting lingering concern about a global chip shortage that\u2019s wiped billions of revenue from the automotive and electronics industries.<\/p>\n

Xiaomi foresees that deficit persisting well into 2022 before easing especially around the second half of the year. Still, it\u2019s expecting ship roughly 190 million smartphones in 2021 – a rise of about 29% from last year — thanks to inroads into overseas markets and an expanding retail network.<\/p>\n

Revenue climbed just 8% to 78 billion yuan ($12.2 billion) in the September quarter, in line with analysts\u2019 projections but marking its slowest growth since the June quarter of 2020.<\/p>\n

Net income plummeted 84% to 788.6 million yuan after the company took a 3.5 billion yuan hit from losses in investments, echoing major writedowns that its tech peers have reported in a quarter hurt by China\u2019s decelerating economy and market ructions.<\/p>\n

\u201cWe faced fairly big pressure in third quarter\u201d from chip shortages, President Wang Xiang told reporters after the results. \u201cThis will continue in the fourth quarter, but will start to ease in 2022.\u201d<\/p>\n

What Bloomberg Intelligence Says<\/strong><\/p>\n

Protracted chip shortages and logistics challenges may continue to hamper Xiaomi\u2019s overseas smartphone sales in 4Q. Economic headwinds in China and intensifying competition with peers could inhibit the company\u2019s sales in the domestic market. <\/em><\/p>\n

Smartphone gross margin may fall in 4Q as Xiaomi releases entry-level products targeting the mass market and offered steep discounts for its premium smartphones during Singles\u2019 Day sales. Yet rising monthly active users (MAU) and premium smartphone shipments may bode well for Xiaomi\u2019s Internet services, which could maintain a gross margin of 70%.<\/em><\/p>\n

– Nathan Naidu and Matthew Kanterman, analysts<\/em><\/p>\n

Xiaomi has lost more than a third of its value this year as supply chain issues and a resurgence of the Covid pandemic in key markets hindered operations. It briefly surpassed Apple to become the world\u2019s No. 2 smartphone vendor before global shipments slumped in the third quarter, primarily due to component shortages.<\/p>\n

The Chinese vendor registered a 4.6% decline in smartphone shipments after high double-digit growth over the previous four quarters as supply issues started to bite, according to research firm International Data Corp. That compared to a 21% surge in shipments from Apple following the release of new iPhones.<\/p>\n

\u201cThe supply chain and component shortage issues have finally caught up to the smartphone market, which until now seemed almost immune to this issue despite its adverse impact on many other adjacent industries,\u201d IDC analyst Nabila Popal wrote in a report.<\/p>\n

\"\"<\/a><\/p>\n

Xiaomi is also facing growing pressure in China. Honor, a former sub-brand of sanction-hit Huawei Technologies Co, resumed business with American suppliers from Qualcomm Inc to Google parent Alphabet Inc after its spinoff a year ago.<\/p>\n

The Shenzhen-based firm targets a similar customer group to Xiaomi and has been expanding its brick-and-mortar store network in China in recent months.<\/p>\n

Xiaomi is expanding its own offline channels, with plans to open 20,000 more shops on its home turf in three years to counter competition, local media reported this month.<\/p>\n

\u201cCompetition from Honor, rising component prices and weakening economies globally could be downside risks,\u201d Citigroup analysts Andre Lin and Arthur Lai wrote in a note ahead of the earnings release. But Xiaomi is still expected to outgrow the market and ship 220 million smartphones in 2022, driven by a recovery in emerging countries, market expansion and channel initiatives, they said.<\/p>\n

A stable smartphone business is key for Xiaomi\u2019s billionaire co-founder Lei Jun to execute on his electric vehicle ambition. Xiaomi plans to mass produce its first EV in the first half of 2024 and its first plant will be in Beijing, Lei said at an investor event in October.<\/p>\n

The company is also vigorously hiring talent from the auto industry to beef up its development capabilities.<\/p>\n

\u201cInvestors may also start pricing in Xiaomi\u2019s EV business value, which we estimate at a theoretical HK$3 to HK$5 per share, based on the assumption that Xiaomi delivers 60,000-90,000 EVs in 2025,\u201d China Renaissance Securities said in a research note.<\/p>\n

Xiaomi has pledged to invest $10 billion in the EV business over the next decade, joining a market that\u2019s already crowded with players from Tesla Inc. to local brands such as Nio and Xpeng.<\/p>\n

\u201cGiven its capital, technological and human resource strengths, we are upbeat on the outlook of Xiaomi\u2019s smart EV business and expect the business to offer a new growth driver,\u201d China International Capital Corp. analyst Hu Peng wrote in a research note.<\/p>\n

\n

Read: Vodacom vs MTN vs Telkom vs Cell C \u2013 how much money mobile networks make per subscriber in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Xiaomi Corp recorded its slowest pace of quarterly sales growth since early 2020 after supply chain mayhem choked off the flow of vital components and rivals like Apple Inc eroded its market share.<\/p>\n","protected":false},"author":59,"featured_media":453574,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[10277,53,26,1635,523,7210],"class_list":["post-540788","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-alphabet","tag-google","tag-headline","tag-huawei","tag-qualcomm","tag-xiaomi"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/540788","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=540788"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/540788\/revisions"}],"predecessor-version":[{"id":540802,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/540788\/revisions\/540802"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/453574"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=540788"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=540788"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=540788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}