US trade sanctions against Huawei play out well for Xiaomi, which continues active international expansion
Huawei is having a very bad time right now due to the US trade ban, however Xiaomi is set to capitalize on that. They are the 4th largest phone supplier on the market and they might very well boost their expansion even further right now due to the issues that Huawei are dealing with at this time.
According to Chew Shou Zi, the CFO for Xiaomi, they are paying a lot of attention to the situation with Huawei. The company has already shipped 27.9 million phones in the first quarter and they do want to serve 70% of all phone users in the world. That’s a bold claim, especially with so much competition, but it might very well be doable to be honest. They are not on a timeline to do that, but they want to do it and that’s all the push they need.
The US Commerce Department’s Bureau of Industry and Security decided that Huawei and 70 of its affiliates will now be a part of an export blacklist. As a result, the company can’t acquire software, hardware or services from any suppliers in the US.
The US president signed an executive order designed to bar all the telecommunication equipment created by Huawei as a threat. The company is actually the largest telecom network gear supplier and they denied the accusations related to spying.
On the other hand, Xiaomi is thriving, they reported a profit of $462 million at the end of March, coming back from almost $800 million in losses last year. They are boosting the number of sales, they also have a lifestyle and IoT business too which brings in home appliances, smart door units, smart TV sets and so on.
Apparently they are also up with around 27.2% at 43.8 billion yuan when compared to 34.4 billion yuan last year. They even went above the estimate which was 42 billion yuan. The shares were down on Monday with 2.6%, but that does change quite a bit.
Lei Jun which created Xiaomi said that the results are satisfactory and they did bring in some amazing handset sales and they are also harnessing the IoT and AI opportunities. These are actually technologies they want to invest 10 billion yuan on in the next 5 years.
The company also wants to create a technical committee that has 19 members and which will help make the company AI-driven. They are indeed focusing on innovation and value, and they are striving to bring in as much exposure as possible for their products, especially at this particular time.
They created this strategy in the middle of various concerns from investors that some markets are saturated and there are also slowly growing economies in various regions. However, the 5G expansion might help and they are expected to grow 2% year on year, which is quite exciting.
Xiaomi is expected to sell 121 million units in 2019 and that would mean 8.6% from the global share. That’s not a bad number at all, considering the exposure that the company has and all those features that they are bringing in to the table. It’s certainly an exciting proposition and something that might impress a lot of people. This all comes from an improved product mix, and the separation from the Redmi and Xiaomi brands is also coming as a growth. Redmi has separated from Xiaomi and they created the Poco brand for the premium market.Source