Xiaomi’s stumble permits Apple to reclaim No.2 spot in smartphones

By Michelle Toh, CNN Enterprise

Xiaomi stumbled within the third quarter because it grappled with fallout from the international chip scarcity and fiercer competitors.

The Chinese language firm, which solely just lately grew to become the world’s second-biggest smartphone maker, fell again to 3rd place behind Apple within the three months ended September, based on Counterpoint Analysis and Canalys.

Posting earnings on Tuesday, Xiaomi stated that its smartphone enterprise had been severely affected by the continuing scarcity of semiconductors, which it expects to proceed by way of the primary half of subsequent yr.

“This yr, there’s a very particular background, and that’s there’s a scarcity of parts globally,” Wang Xiang, Xiaomi’s president, stated on an earnings name. “The scarcity is a giant problem to us.”

The corporate logged 43.9 million international smartphone shipments within the third quarter of 2021, down about 6% in contrast with the identical interval final yr.

Xiaomi has known as smartphones “the cornerstone” of its enterprise, which incorporates different related gadgets resembling residence home equipment. Recently, the corporate has additionally introduced a push into electrical automobiles, with plans to mass produce its first car within the first half of 2024.

It excited traders this summer season after leapfrogging Apple to grow to be the world’s second best-selling producer. The Beijing-based firm’s shipments had soared within the three months ended June, trailing solely these of Samsung.

Setbacks on provide

Since then, nonetheless, Xiaomi has been hit exhausting by provide chain woes.

Tarun Pathak, a analysis director at Counterpoint, stated that whereas element shortages had affected nearly each vendor, Xiaomi needed to cope with larger complications as a consequence of its in depth lineup.

In the latest quarter, the corporate provided greater than 50 completely different smartphone fashions, in comparison with about 14 that Apple had in the marketplace, he estimated.

That provides complexity and “turns into difficult,” stated Pathak. “As a result of you need to take care of a spread of parts.”

A relative lack of publicity to the issue helped Apple, partly, reclaim the second spot within the race within the third quarter, he added.

The US big additionally benefited from robust iPhone 13 gross sales, based on Canalys Analysis. In a latest report, the agency estimated that Apple had nabbed 15% of world shipments, only one % greater than Xiaomi.

However don’t rely Xiaomi out, based on Pathak.

He stated the agency might effectively reclaim its runner-up place, significantly because it often performs strongly within the first half of the yr, with upcoming occasions resembling Chinese language New Yr.

Xiaomi’s final objective — of finally attending to primary — isn’t out of the query both, based on Pathak.

He stated the corporate would want to retain its lead in two of its most necessary markets, China and India, whereas working to carve out a better presence in locations resembling the US.

“In the event that they [become] primary, it might probably’t be simply due to these two nations,” Pathak stated. “The US has the quantity three [smartphone] market on the planet, which is essentially lacking from Xiaomi’s portfolio.”

Xiaomi posted general income of 78.1 billion yuan ($12.2 billion) within the third quarter. That represented an 8% improve in comparison with the identical time final yr, however was barely lower than analysts had been anticipating.

Internet revenue climbed 25% to just about 5.2 billion yuan ($814 million) throughout that interval, barely larger than analyst projections.

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