Xiaomi earnings spike 163% as Huawei wilts under sanctions

It's been a good month for China's emerging tech giant Xiaomi.

Two weeks ago it overturned a US Defense Department attempt to label it a PLA-linked entity – a ruling that would have prevented US entities from trading its stock.

Now it's handed down a bumper Q1 result, beating analysts' estimates with a 163% leap in adjusted net profit to 6.1 billion yuan (US$955.8 million) and 55% higher revenue of 76.9 billion yuan ($12.1 billion).

Open all hours: Xiaomi's 2021 is going from strength to strength - at Huawei's expense.
Open all hours: Xiaomi's 2021 is going from strength to strength – at Huawei's expense.

It is also about to enter the EV market with an initial 10 billion yuan ($1.6 billion) investment.

A major contributor to Xiaomi's growth has been the US sanctions against Huawei, whose worldwide market share has plunged from 17% a year ago to 4%, Counterpoint numbers show.

Nature abhors a vacuum

The sale of the Honor business, which accounted for around a quarter of shipments, is just a small factor.

Xiaomi and domestic rivals Oppo and Vivo have been helping themselves to the Shenzhen firm's business at home and abroad.

Xiaomi has a strong global footprint, with international sales 51% higher at 37.4 billion yuan ($5.9 billion) and now accounting for 49% of total revenue.

It ranks third behind Samsung and Apple in global rankings after shipping a record 49 million units in Q1, up 62%, according to Canalys.

At-home device sales grew 75%, placing Xiaomi fourth in the market, although it points out it has captured 16% of the top-tier category of 4,000-6,000 yuan.

It ranks in the top five smartphone companies in 62 countries and has been number one in India for the past 15 quarters.

Outside interests

Devices aside, Xiaomi is also growing a large IoT business. The segment reported 41% growth for the quarter and now accounts for 24% of total sales, with 351 million devices connected to its platform. It shipped 2.6 million smart TVs.

Its Internet services segment grew 11% with a gross margin of 72%, serving a global user base of 425.3 million, a 29% increase over last year.

The company has also grown a handy investment portfolio. It has 320 firms with an aggregate book value of 51.9 billion, an increase of 61% year-over-year.

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Its Hong Kong stock price closed 3.20% higher today at HK$29.05.

The shadow on Xiaomi's outlook is the slowing of demand in India and China that has led to all major handset brands cutting their forecasts.

According to Taiwan's Digitimes, Xiaomi, Oppo, Realme and Honor have all reduced orders because of the spread of the pandemic in India and slower than expected 5G sales in China over the May Golden Week holiday.

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— Robert Clark, contributing editor, special to Light Reading

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