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Answering a question about how the rival’s new 5G chip launched in China, namely, the Kiri 9000 that underpins Huawei’s flagship Mate 60 Pro, will have an impact on Xiaomi’s sales in the third quarter, Xiaomi management expected, at an earnings call, that smartphone sales in the third quarter would continue to have a sequential increase. Noticing the domestic rival’s launch, executives admitted competition in China’s smartphone market has always been fierce, and suggested Xiaomi’s capability has improved a lot in recent years. No matter what competitors do, the most important thing for Xiaomi is to do its own thing well and focus on growth of its capability and how to make good products, they said. That’s way they expected the overall strategy will not change in any way, and there will not be any material impact on the pace of Xiaomi’s launches or its sales forecasts.

Xiaomi President Lu Weibing clarified that the Indian government has frozen, not confiscated, his company’s RMB4.8 billion (US$658 million) of funds due to a local legal dispute. Lu reiterated Xiaomi will firmly proceed the legal actions in India, and said some indexes will soon show the company has made pretty big improvement in Indian business. As to the long-awaited electric vehicle (EV) business, Lu said Xiaomi’s automaking business has very well progress, and part of recent progress has even much better than the company’s expectations. He added Xiaomi didn’t change its plan to mass produce EVs in 2024.

The remark came as Xiaomi posted financial results that showcased resilience despite the weakening global smartphone market. During the quarter ended June 30, Xiaomi’s revenue fell 4% year-over-year (YoY) to RMB67.35 billion, beating analysts’ estimated RMB65.8 billion, and the adjusted net profit surged 147% YoY to RMB5.14 billion, topping expectation of RMB4.1 billion. The top and bottom of line rose 13.2% and 59% from the previous quarter, respectively. Gross profit in the second quarter gained 20.3% YoY to RMB11.8billion, and gross margin hit the quarterly record of 21%, well above the expected 20.1%.

The worldwide smartphone market continued to suffer from soft demand in the June quarter as the global shipments that quarter dropped 10.1% YoY, marking the sixth consecutive quarter of yearly decline, according to Canalys. The tech market analyst firm estimated Xiaomi maintained the third with a 12.9% market share by shipment that quarter, increasing 1.6% percentage points from the first quarter. Xiaomi’s smartphone business shipped 32.9 million units and generated RMB36.6 billion, accounting for 54.3% of total revenue in the June quarter. The gross margin of smartphone increased 4.7% percentage points YoY to a quarterly record of 13.3%.

Its smartphone average selling price (ASP) climbed 2.8% YoY to RMB1,112 that quarter, while the ASP in mainland China increased more than 25% YoY owing to continued premiumization strategy. Xiaomi’s smartphone units sold in the RMB4,000–RMB6,000 price segment in mainland China garnered a market share of 12.7% in the second quarter, with a 6.2% points YoY increase, according to third-party data. The data showed sales of premium offerings as a percentage of Xiaomi’s overall smartphone units sold in mainland China increased 3.3 percentage points to 20.1% that quarter, and ASP of smarphones sold in mainland China grew over 24% YoY.

Xiaomi’s other businesses also had highlights in the second quarter. Revenue from IoT and lifestyle products grew 12.3% YoY to RMB22.3 billion, and gross margin set new high with 17.6%, up 4.7% percentage points YoY. Xiaomi said smart large home appliances continued to demonstrate robust growth momentum, with a more than 70% YoY increase in revenue, and shipments of its air conditioners and refrigerators both reached all time highs in the June second. Revenue from internet services also hit a record with RMB7.4 billion, a 6.8% YoY growth, and the gross margin increased 1.1 points YoY to 74.1%. Advertising brought RMB5.1 billion with a 13% YoY increase, setting a record high.

快報