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Xiaomi Corp posted its first revenue gain in almost two years, a welcome boost for a smartphone maker that’s begun aggressively attacking its Chinese rivals with higher-end models at home and abroad. It posted sales of 70.9 billion yuan ($9.9 billion) for the September quarter, versus average projections for 70.5 billion. Net income was 4.9 billion yuan, compared with the average estimate of 4.3 billion yuan.
The smartphone maker is hopeful that global phone shipments will jump during the holiday quarter though on a full-year basis, Xiaomi and its rivals should sell about 5% fewer devices in 2023. Shipments should bounce back in 2024, executives told reporters after the earnings report. Xiaomi is emerging from a years-long funk, when global demand for smartphone and other electronics cratered and rivals from Huawei Technologies Co to Apple Inc and Oppo encroached on its once-dominant position. But the recent launch of a well-received line of flagship Xiaomi 14 phones could rejuvenate growth during the holidays in China, despite an uncertain consumer economy.
There’re growing signs the global smartphone market may finally be climbing out of a trough. Xiaomi and Huawei led an 11% jump in October smartphone sales in China, though that’s coming off a severe Covid-era comparison. Huawei, which in August made waves with the Mate 60 Pro nationwide, accounted for the bulk of that rebound.
Investors are betting that Xiaomi will be among the biggest beneficiaries of any rebound. It’s gained about $19 billion of market value since a June low on excitement over its latest handset as well as mounting anticipation over a foray into electric vehicles. Executives reaffirmed Xiaomi’s target to beginning EV production sometime in the first half of 2024.
Xiaomi sold more than one million of its latest 14 series devices in their first week in October, Chairman Lei Jun wrote in a Weibo post. And last week, the public got a first glimpse of its envisioned five-seater sedan after Beijing approved the vehicle’s roadworthiness. While it’s unclear if Xiaomi still needs additional licenses for that EV project to proceed, the car will be manufactured by state-owned Beijing Automotive Group Co.
Xiaomi’s latest HyperOS system connects its products from smartphones to TVs. The heavily tailored Android-based platform could also link EVs, the much-watched new product line that co-founder Lei has touted as his last startup endeavor. The company, best known for razor-thin profit margins on high-spec smartphones and household electronics, is looking to make a move into the crowded space, but that entails significant amounts of time and money. To offset the heavy investments required, Xiaomi has tried to keep a lid on costs such as marketing.