Chinese smartphone maker Xiaomi flagged on Wednesday rising costs from a global chip shortage and reported quarterly revenue below market estimates, even while its international business head jumped ship to TikTok owner ByteDance.
Shares in Xiaomi Corp fell as much as 9% at the begining of morning trading on Thurs, before paring losses to trade down 5%, reports Reuters .
Xiaomi is the best and newest in a line of global businesses to warn of an great chip shortage, which at first hit production at vehicle companies including Volkswagen, but is now pressuring makers associated with smartphones and consumer electronics.
As well, Xiaomi’s technique to diversify revenue by investing in financial technology firms has run afoul of China’s operating crackdown on such businesses.
Revenue in Xiaomi’s internet services unit, which houses the fintech business, rose just 8% in the fourth quarter.
“ Tightening up regulations on the fintech company would weigh on 2021 (estimated) earnings growth, ” Daiwa Capital Marketplaces analyst John Choi stated in a note.
Still, Xiaomi’s sales hopped by 25% in the one fourth ended December to seventy. 46 billion yuan ($10. 79 billion), and altered profit rose 37% to 3. 20 billion yuan. Analysts had expected income of 75. 23 billion yuan and a profit associated with 2 . 94 billion yuan, according to Refinitiv data.
Smartphone sales, which account for the bulk of Xiaomi’s income, rose 38% to forty two. 6 billion yuan.
The company’s deliveries in China surged simply by 52% from a year earlier as it grabbed market share through rival Huawei Technologies Co Ltd, which has steadily retreated from the global market because of U. S. -led sanctions, helping Xiaomi corner 15% of the domestic market share.
Huawei has been struck massively by the US bar on key components, which has naturally caused its shipments to fall both within China and overseas.
Anticipating the opportunity, Xiaomi and other Android-based smartphone manufacturers ramped up production of their devices towards the end associated with last year.
This particular, however , contributed to the chip shortage, which was partly caused by a pandemic-led demand for electronics outstripping supply from chipmakers such as Qualcomm.
Huawei President Wang Xiang has been trying to restore a feeling of calm among his soldiers, however , insisting that while the company might be under stress, it is going to do the best it can for its customers.
“ To be honest, we will do our best to offer the best price we are able to consumers. But sometimes, we may have to pass part of the cost increase to the consumer in different cases, ” he said. “ We are feeling pressure, but we are looking okay. ”