Although Xiaomi remains in a very comfortable market position alongside Samsung and Apple, it seems that it started 2022 with a stumble. According to data from the company itself, Xiaomi sales fell during the first quarter of 2022 in a resounding way, less than half. Why did this happen and what does Xiaomi hope to do about it?
The pandemic is to blame for the fall, according to Xiaomi
Recently, Xiaomi revealed its financial report on the first quarter of 2022 and the numbers are not very optimistic. The company remains in profit by reporting 2.9 billion Renminbi (the official name of the Chinese yuan) in Q1 2022. However, this figure is 52.9% less than what the company earned during Q1 2021 .
The president of the Xiaomi Group, Wang Xiang, pointed to the pandemic as the main culprit, which led to a shortage of chips that is affecting the entire technology market. For Xiang, the pandemic affected not only the company’s production , but also its logistics and sales. In addition, he assures that the company’s costs increased due to the aid that Xiaomi gave its employees during the last two years, as well as production expenses.
Xiaomi expects better numbers for Q2 of 2022, since it has invested for it
After speaking about the setback in Q1, Xiang made some comments about the second quarter of 2022. He said that he is not sure how this period will end for the company, but he is hopeful that the results will be better .
On the one hand, it points out that the shortage of chips is gradually being solved, so Xiaomi could boost its production and subsequent sale. On the other hand, and while he did not blame the current results on this, Xiang mentioned that the company spent 3.5 billion yuan on R&D during Q1 2022 . The objective? Develop better devices and experiences for the user of their mobiles, tablets and other devices.
Maybe it’s not the pandemic, but the users and the R&D budget
If you paid attention to the last paragraph, something may have caused you suspicion: Xiaomi increased its budget for research and development during Q1 2022, an investment that definitely influences the calculation of reported earnings . The figure presented (3.5 billion yuan) could well cover all that drop in earnings, although we are aware that in Q1 2021 there also had to be a budget for R&D, but it was lower than the current one.
Thus, Xiaomi’s drop in revenue may be less tragic than it seems, as the company is investing in its future growth. However, it also calls into question that the only culprit for these results is the pandemic, so Xiang could have been more transparent with his remarks.
In addition, there is another additional detail that could make you suspicious: Q1 of 2022 developed into a pandemic, but so did Q1 of 2021 (and in a much worse global reality). Thus, it is a bit illogical that Xiaomi has earned less money just “because of the pandemic” so far in 2022. What else could be happening? Simple, that users renewed their devices last year and do not feel the need to change again in just one year.
The latter is a reality, sales of mobile phones, tablets, laptops and others skyrocketed during the first year of the pandemic due to teleworking and distance education. That, and with how powerful all of these devices are these days, it’s understandable that users don’t want to switch just yet.
Do you think that the president of Xiaomi exaggerated a bit with his statements? Leave us your opinion in the comment box, although you could also go through our little analysis of why the Xiaomi should not be as expensive as the iPhone or Samsung.
