Xiaomi has been dealt a ‘heavy blow’ to business

Chinese smartphone maker Xiaomi Corp reported a drop in first-quarter revenue, as COVID-19 lockdown and control measures hit demand in China, while broad economic difficulties including Russia’s attack on Ukraine added to the costs incurred in doing business.

Refinitiv data showed that revenue for the quarter ended March 31 fell to 73.35 billion yuan ($10.85 billion) from 76.88 billion yuan a year earlier, and low more than the 74.3 billion yuan expected by analysts.

Chairman Wang Xiang said: “In the first quarter, the whole industry faced challenges, first the shortage of components, then the rise of COVID-19, and also the impact on the environment. These challenges have dealt a heavy blow to our business.”

He noted that COVID-19 outbreaks first in Hong Kong and then in Shanghai have disrupted shipments, with the closure in Shanghai lasting months and conflict in Ukraine likely to affect shipments. to revenue in the second quarter of the year.

Xiaomi said smartphone shipments fell 22.1% to 38.5 million units in the first quarter of this year. The loss for the period amounted to 530.7 million yuan, down from a profit of 7.79 billion yuan a year earlier.

Xiaomi, which generates most of its revenue from mobile device sales, said smartphone revenue fell to 45.8 billion yuan this quarter.

The Chinese company and rival phone makers Vivo and Oppo have asked suppliers to cut orders for the next few quarters by more than 20%, compared with previous plans after a month-long COVID lockdown. has severely disrupted supply chains and damaged consumer confidence, Nikkei Asia reported.

Xiaomi, China’s largest smartphone maker and the third largest globally, has told suppliers it will reduce its full-year forecast to between 160 million and 180 million units from its 200 million target. earlier, sources said. Xiaomi shipped 191 million smartphones last year and is aiming to become the world’s top smartphone maker. The company may revise its orders as it continues to monitor the supply chain situation and consumer demand in the domestic market.

Suppliers told Nikkei Asian full of retail channels. This dire outlook is in stark contrast to the start of 2022, when most smartphone makers expected a post-COVID-19 recovery and an improvement in the supply of components. to sue.

The output forecasts for smartphone makers with little exposure to the Chinese market, such as Samsung Electronics, are relatively unchanged, although they are facing challenges, according to multiple sources familiar with the matter. challenges from inflation and the war in Ukraine. The South Korean tech giant hopes to ship more than 270 million units this year, a number that will be up slightly from last year.

Google, which recently unveiled its new Pixel 6A and hinted that it will launch its flagship Pixel 7 series in the fall, has told suppliers it plans to produce more than 10 million units in the coming year. this year, double the number shipped in 2021.

Naturally, Xiaomi, Oppo and Vivo have all benefited from the US crackdown on Huawei, which has consumed the once huge smartphone market share at home and abroad. Xiaomi first climbed to the number 3 smartphone maker position in the world last year with 14.1% market share, compared with 9.2% in 2019, according to data from IDC. In the second quarter of last year, it even surpassed Apple to become the No. 2 smartphone manufacturer in the world.

But that wind seems to be fading away. During the first three months of this year, Xiaomi, although still ranked 3rd in the world, saw its shipments drop by 18% year-on-year. Oppo and Vivo shipments fell 27% and 28% year-on-year, respectively.

China’s top chipmaker Semiconductor Manufacturing International Corp has warned of further troubles, predicting global smartphone shipments will drop by about 200 million units this year due to COVID-19 lockdowns and the Ukraine war.

Apple dropped 2 million orders for its low-cost iPhone SE and dropped a few more million after the Covid-19 lockdown in Shanghai. Its key MacBook, iPhone and iPad assemblers in China are just gradually resuming production.