By WU Yangyu
Smartphone maker Xiaomi Corp's revenue increased 33.5 percent to 328.3 billion yuan (US$51.48 billion) last year. Profits were up 70 percent, to 22 billion yuan.
Xiaomi has moved quickly to fill the void left by Huawei. Shipments increased by 30 percent last year, faster than its major competitors. It is now the third-largest phone maker in the world behind Apple and Samsung.
Premium phones accounted for 13 percent of total shipments, up from 7 percent. But average selling (ASP) increased only 5.5 percent.
Founder and CEO LEI Jun calls the high-end market a must-win for Xiaomi. In an open letter posted on Weibo in February, he said Xiaomi should look to Apple for products and experience.
The internet business, which includes ads and gaming, contributed only 8.5 percent of revenue but 36 percent of profit. With a gross margin of 74 percent, it is fundamentally more profitable than smartphones (12 percent) and IoT (13 percent). Although most of the internet service revenue still came from China (23 billion yuan out of 28 billion), the overseas portion grew 84 percent. It will provide valuable cash for Xiaomi, which needs cash for its car-making endeavor.
The 70 percent profit increase was partly the result of the slowdown in the first half of 2020 when the pandemic first hit. Net profits increased 163 percent in Q1, but the state of the business is more accurately reflected in the growth figures in the latter half of the year (25 percent increase in Q3 and 40 percent in Q4).
It remains to be seen whether Xiaomi can maintain its lead as Huawei’s spinoff budget line Honor finds its footing. Spending on car-making will also erode the company’s overall profits. The car team reportedly already has over 1000 people and will start mass production in 2024, faster than previously expected.
