Xiaomi profits surge as it grabs market share after Huawei retreat

Xiaomi profits surge as it grabs market share after Huawei retreat

SHANGHAI (Reuters) - Chinese smartphone maker Xiaomi Corp on Wednesday reported a 36.7% rise in fourth-quarter net profit, as its major Android rival Huawei steadily retreats from the global market due to U.S.-led sanctions.

Adjusted net profit for the quarter ending Dec. 31 rose to 3.2 billion yuan ($490.84 million), beating analysts’ expectations of 2.9 billion yuan.

Sales jumped 24.8% year-on-year to 70.5 billion yuan. Smartphone sales, which make up the bulk of the company’s revenue, hit 42.6 billion yuan, a 38.4% increase.

In the October-December quarter, Xiaomi’s shipments in China surged 52% from a year earlier, and the company cornered 15% of the market share.

Following a ban by Washington on key components placed on its smartphones, handset shipments by Huawei Technologies Co Ltd plummeted both in China and overseas, according to market research reports.

Anticipating the opportunity, Xiaomi and other Android-based smartphone makers ramped up production of their devices towards the end of last year.

This, however, contributed to an ongoing chip shortage that was partly caused by demand for consumer electronics during the pandemic, outstripping supply from chipmakers such as Qualcomm.

In February, Xiaomi vice president Lu Weibing called the crunch an “extreme shortage”.

Overseas sales grew 27.6% to 33.8 billion yuan, accounting for 47.9% of the company’s total revenue.

That marks a slight return to a reliance on its home market in China. The company reported over 50% of its revenue came from international markets for the first time when it announced its first quarter 2020 results.

Concurrent with Wednesday’s earnings, Xiaomi announced it acquired a 50.09% in Zimi, the maker of Xiaomi’s branded portable phone chargers, in a deal valued at $204.7 million.