• In its latest financial results, Xiaomi reported that its profits slumped by around $1 billion between January and March 2023.
• In that period it shipped 8 million fewer smartphones compared to the first three months of 2022.
• Xiaomi claims it is still the third largest smartphone mover in the world, meaning the industry at large is set for a shipments bloodbath due to the ongoing economic crisis.

Blaming a weakening international market for smartphones, Chinese manufacturer Xiaomi reported a huge drop in its revenues. It even had to resort to “enhanced methods” to clear its inventories in overseas markets as fewer people were looking to spend on gadgets in the first quarter of 2023.

According to its latest financial results, Xiaomi revenues were $1.97 billion less in the first four months of 2023 compared to the same period in 2022.

Gross profit for the quarter, measured from 31st December until 31st March, sat at $1.64 billion (around a billion less than the year prior).

A significant portion of lost profits came from its smartphone sales, which saw a 23.6 percent drop in revenue.

Xiaomi says it shipped around 8 million fewer smartphone devices during the first three months of the year than in the same period in 2022.

According to the company, this was “primarily due to the global smartphone market remained weak, marking the lowest first quarter shipment level seen since 2014.”

In Africa, the global economic downturn caused a 19.9 percent year-over-year decline in the smartphone market in Q3 2022, with Egypt being the market most affected.

South Africa and Kenya experienced the smallest market shrinkages on the continent in that period, according to a report from the International Data Corporation (IDC).

To counteract slowing shipments Xiaomi was forced to decrease the average selling price of its smartphones across the globe by around $5.22 (~R100.80) per unit.

Despite this, Xiaomi says it managed to increase its market share domestically in China, especially after the launch of Xiaomi 13 series of devices in late 2022.

Slowing sales aside, the company cites a report from tech market firm analyst Canalys claiming that Xiaomi manages the third most smartphone shipments in the world.

We expect other manufacturers to post receding sales in the coming months. But wasn’t just smartphones that the Xiaomi was struggling to move.

The company saw decreased revenues for its IoT and lifestyle products, and its smart TVs and notebooks.

IoT and lifestyle products made $381 million less than in the previous year, while its smart TV and notebook segment made Xiaomi $198 million less than they did in the first few months of 2022.

However, the company managed to grow revenues for its smart large home appliances, including air conditioners and refrigerators, by around 60 percent year over year.

Xiaomi is undergoing what it calls a “premiumization strategy” where it will be looking to release more high end smartphones moving forward. It hopes this strategy will drive profits.

“In less than one year, we released four consecutive premium smartphone models, and all of them received highly positive customer reviews in the first month after their market introduction,” it said.

The company says it also investing more time and effort into researching artificial intelligence-powered products and services – “We officially established an AI Lab Foundation Model team in April. At present, we have more than 1,200 AI-related employees.”

“We will continue to expand AI-related user scenarios maximize our advantages in technology, while also exploring opportunities with potential partners,” Xiaomi concluded.

[Image – Photo by Xingye Jiang on Unsplash]