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A customer uses the first Mi Express Kiosk in Bangalore, India, on May 17, 2019. Photo: Xinhua

China’s Xiaomi pushes global smartphone expansion as it monitors US trade ban on Huawei

  • Beijing-based Xiaomi shipped 27.9 million smartphones worldwide in the first quarter
Xiaomi

Xiaomi Corp, the world’s fourth largest smartphone supplier, said it was closely monitoring the recent move by Google to curtail some business with Chinese rival Huawei Technologies as the company accelerates its international expansion plans.

“We are paying a lot of attention to this issue, but it has no direct impact on us,” said Chew Shou Zi, chief financial officer at Xiaomi, in a conference call with analysts after the close of trading in Hong Kong on Monday.

Chew said the Beijing-based company, which shipped 27.9 million smartphones in the first quarter, aims “to serve 70 per cent of the world’s population” as part of its expansion strategy. He did not provide a timeline on when that goal would be achieved.

Google’s action came in the wake of a decision last week by the US Commerce Department’s Bureau of Industry and Security to place Huawei and 70 of its affiliates on an export blacklist, which restricts the Chinese firm from buying hardware, software and services from American hi-tech suppliers.

Xiaomi says it shipped 27.5 million smartphones in first quarter

That followed US President Donald Trump’s signing of an executive order that barred the use of telecommunications equipment made by companies that are deemed a threat to national security. Huawei, the world’s largest telecoms network gear supplier, has repeatedly denied US accusations that its products can be used for spying by Beijing.

Xiaomi on Monday reported a net profit of 3.2 billion yuan (US$462 million) in the quarter ended March, rebounding from a 7 billion yuan loss in the same period last year, on the back of steady handset shipment growth overseas as well as increased sales at its internet of things (IoT) and lifestyle business, which offers products that range from smart television sets and home appliances to photo printers and smart door locks.

The Hong Kong-listed company posted better-than-expected revenue in the first quarter, up 27.2 per cent to 43.8 billion yuan from 34.4 billion yuan a year ago. That beat analysts’ consensus estimate of 42 billion yuan.

Its shares were down 2.6 per cent to HK$9.89 at the close of trading on Monday, representing about a 40 per cent decline from the price of its initial public offering in June last year.

Xiaomi in drive to spearhead engineering culture

Lei Jun, Xiaomi’s founder and chief executive, said in a statement on Monday that the latest quarterly results showed a satisfactory start to the implementation of the company’s “smartphone plus AIoT dual-engine strategy”, which covers increased handset sales in overseas markets as well as development of new artificial intelligence and IoT opportunities.

“Looking ahead, we will be investing 10 billion yuan in the development of ‘All in AIoT’ in the next five years,” Lei said.

Xiaomi last month announced that it will set up a technical committee comprising 19 members as part of its efforts to transform the company into an AI-driven company, and promised millions of yuan in rewards and compensation for exceptional and innovative engineers.

That strategy has come amid investor concerns about ongoing headwinds for smartphone makers, including saturated markets and slowing economies as the telecoms industry gears up for the roll-out of next-generation 5G networks.

China smartphone makers spin off secondary brands to go upscale

“With new models rolling out amid a sluggish market, we expect Xiaomi’s global [smartphone] shipment to grow just 2 per cent year on year [in 2019],” wrote Bernstein analyst Mark Newman in a report last week. He projected Xiaomi’s smartphone shipments to reach 121 million units this year, which would give it an 8.6 per cent global market share.

Still, Newman estimated that the average selling price of Xiaomi’s smartphones improved by 9 per cent year on year in the first quarter, “thanks to the better product mix and the separation of the Xiaomi and Redmi brands”.

In January, Xiaomi announced that its low-cost Redmi line has become an independent brand several months after the Beijing-based company unveiled its Poco brand for the premium market segment.

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