China-based Xiaomi’s revenues cratered 20% in the second quarter, following shrinkage in the world’s biggest smartphone market and downward trends globally in nearly all electronics categories.
The company reported Friday that its sales were $10.3 billion (70.17 billion yuan) for the second quarter, a 20% drop year over year. Net income fell 67%.
Xiaomi is the third-largest smartphone maker globally, behind Samsung and Apple. In the second quarter, Xiaomi had nearly 14% share of the global smartphone market, behind second place Apple at 15.6%, IDC said. Total smartphone shipments in the second quarter were 286 million phones, an 8.7% decline year over year.
Lessening demand has been seen in other electronics as well, such as PCs and smart TVs, according to analysts. Some chipmakers are reporting demand is down for chips used in servers in data centers as well.
Inflation and continuing supply chain restrictions due to lockdowns over Covid in Shanghai and other cities in China have both lessened demand and supply, analysts have noted.
PCs are likely to be down by double digits in 2022 and continue a decline into 2023, IDC said recently. Chromebook shipments crashed by 51% in the second quarter year over year, the company said.
China consumes one-third of all the chips in the world and is the largest smartphone market. Trends there could be felt in the U.S. and elsewhere. “In the Chinese market, there was the resurgence of the pandemic, so as a result, demand was difficult and weak,” Xiaomi President Wang Xiang said on an earnings call. Xiaomi’s smartphone sales make up more than half of the company’s total revenue and those fell by 29%.
The overall economy in China also slowed in July, prompting a central bank rate cut, according to reports.
Xiaomi has pivoted to self-driving vehicles and other technologies to generate revenues because of smartphone declines. Recently, the company said it is running tests on 140 vehicles in various Chinese cities for autonomous driving.
In recent days, Wall Street analysts have reported an inventory correction in chips could lead to reduced revenues as demand for electronics dries up.