Revenue climbed just 8% to 78 billion yuan ($12.2 billion) in the September quarter, in line with analysts’ projections but marking its slowest growth since the June quarter of 2020. Net income plummeted 84% to 788.6 million yuan after the company took a 3.5 billion yuan hit from losses in investments, echoing major writedowns that its tech peers have reported in a quarter hurt by China’s decelerating economy and market ructions. “We faced fairly big pressure in third quarter” from chip shortages, President Wang Xiang told reporters after the results. “This will continue in the fourth quarter, but will start to ease in 2022.”
Xiaomi foresees that deficit persisting well into 2022 before easing especially around the second half of the year. Still, it’s expecting ship roughly 190 million smartphones in 2021 — a rise of about 29% from last year — thanks to inroads into overseas markets and an expanding retail network.
Protracted chip shortages and logistics challenges may continue to hamper Xiaomi’s overseas smartphone sales in 4Q. Economic headwinds in China and intensifying competition with peers could inhibit the company’s sales in the domestic market. Smartphone gross margin may fall in 4Q as Xiaomi releases entry-level products targeting the mass market and offered steep discounts for its premium smartphones during Singles’ Day sales. Yet rising monthly active users (MAU) and premium smartphone shipments may bode well for Xiaomi’s Internet services, which could maintain a gross margin of 70%.