‘Small grain of rice’ Xiaomi and ambitions to surpass Apple and Huawei

Tram Ho

According to a Nikkei source, Xiaomi – the world’s fourth-largest smartphone maker, is negotiating with suppliers to increase ordering more components for its goal of producing 240 million smartphones. This figure outstrips Xiaomi’s output this year and will exceed the average annual Apple iPhone deliveries. That shows the huge ambition of “small grain of rice” Xiaomi wants to overtake Huawei – which is suffering heavy losses due to trade tensions between the US and China.

To do that, of course Xiaomi will need more new financial resources to expand production capacity. Therefore, on Wednesday, this company offered to sell more shares on the Hong Kong Stock Exchange and raised $ 3.06 billion. However, their stock trading was suspended on the same day for unknown reasons.

Hạt gạo nhỏ Xiaomi và tham vọng vượt Apple, Huawei - Ảnh 1.

In fact, Xiaomi told a few suppliers that it has a much higher internal goal of handing over 300 million smartphones over the next year – but this seems unlikely to be achieved. Qualcomm and MediaTek – the key suppliers of chips to Xiaomi, Oppo, Vivo and Samsung cannot supply such output to a single company at a time when the whole technology supply chain is facing Severe shortages like this one.

“Xiaomi is setting a tougher target for suppliers as they hope to expand their market share before competitors catch up. Besides, they also want to make sure more components are available, just in case. Any disruption from the existing supply chain leads to a lack of components, “said an analyst.

Hạt gạo nhỏ Xiaomi và tham vọng vượt Apple, Huawei - Ảnh 2.

Xiaomi’s output of smart phones over the years.

However, even if Xiaomi aims to deliver 240 million smartphones next year, this number is equivalent to Huawei’s peak of 240.6 million smartphones in 2019 – an all-time high. with a Chinese smartphone manufacturer. Apple ships an average of 200 million iPhones each year.

Xiaomi becomes the world’s fourth largest smartphone maker in terms of volume by 2018. Its ambitions for outstanding growth come after they deliver 125.6 million units in 2019. First 9 months of 2020 , the number of smartphones delivered increased 16% year-on-year to 104.5 million units.

“Overall smartphone market is expected to decline by 9.5% this year but next year, the market will grow for the first time since 2017 – encouraging growth plans by many manufacturers.”

Xiaomi is not the only Chinese manufacturer trying to capitalize on the troubled Huawei.

Oppo, the world’s 5th largest smartphone maker by volume, also told suppliers that they will produce around 170 million smartphones next year, which means a growth rate of nearly 50. % compared to 114.3 million units in 2019.

Meanwhile, Washington continued to increase pressure on Huawei in September by banning it from accessing any chip and component manufacturers using US technology.

Huawei’s smartphone output fell 22% this year in the June-September quarter, with its global market share falling from 18.6% to 14.7%. By this quarter, Huawei is also expected to sell fewer handsets, although a few suppliers, including Qualcomm and Sony, have been granted a license to resume business with Huawei.

Xiaomi meanwhile reported record sales of 72.2 billion yuan during the June-September period – largely thanks to overseas market contributions – up more than 50 percent year over year. Net profit rose nearly 19% this year to 4.1 billion yuan – another record-making quarter. And for the first time, Xiaomi has surpassed Apple in quarterly rankings, becoming the world’s third largest smartphone maker after Samsung and Huawei.

Although Xiaomi’s ambitions next year are enormous, the tech industry is experiencing a period of severe component shortages as demand for remote work and entertainment devices has increased.

The increase in the rollout of 5G network infrastructure has also driven demand for network products. Not to mention that Huawei has also increased stockpiling of a large amount of components to prevent problems with the supply chain.

Xiaomi President Wang Xiang at the end of November admitted that the lack of components has significantly affected his company’s plans. An industry source said that it is not clear when the supply chain disruption will end or that Xiaomi’s ambitious goal can be achieved.

“The fact is that companies are all trying to expand their market share at a time when Huawei is in trouble and the entire industry faces supply chain shortages. sue as they want and whether their products are competitive enough to maintain the market share they get from Huawei, “said Brady Wang, an analyst.

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Source : Genk