Chinese technology company Xiaomi’s net profit fell by one-fifth year-on-year in the second quarter to 9.46 billion yuan (approximately 29 billion CZK). The company’s smartphone business was negatively impacted by rising memory chip costs. Total revenue declined by six percent to 108.9 billion yuan.
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Smartphones under pressure from pricier memory
Xiaomi’s smartphone sales fell by 26.5 percent year-on-year in the second quarter to 31.2 million units. However, revenue from smartphone sales declined by only 7.5 percent to 42.1 billion yuan, as the drop in sales volume was partially offset by higher selling prices.
The company stated that the global smartphone sector faced challenges in the second quarter stemming from a significant increase in memory costs. Semiconductor firms have recently been prioritizing production of chips needed for artificial intelligence infrastructure, which is contributing to a shortage of memory chips used in personal computers, smartphones and other electronics, pushing their prices up.
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Electric vehicles to be another growth engine
Xiaomi delivered 104,199 electric vehicles to customers in the second quarter, representing a year-on-year increase of more than 28 percent. The company currently offers electric vehicles only in its domestic Chinese market, but plans to launch sales abroad next year.
Xiaomi’s expansion into foreign automotive markets could support further company growth and increase pressure on established Western car brands, for example in Europe. However, the company will also face obstacles in the form of tariffs, regulatory measures and stricter safety standards.
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Source: ÄŒTK
