Xiaomi encounters the crisis of "lack of core" and the rumor of building a car has not been "settled".

On March 24, Xiaomi Group released its results for the fourth quarter and the whole year of 2020. The total revenue in 2020 reached 245.9 billion yuan, an increase of 19.4% over the same period last year. The adjusted net profit was 13 billion yuan, up 12.8% from the same period last year, and the total income in the fourth quarter of 2020 was 70.5 billion yuan, up 24.8% from the same period last year. The adjusted net profit reached 3.2 billion yuan, an increase of 36.7% over the same period last year. Prior to the release of the results, the market expects Xiaomi Group to have a revenue of 75.226 billion yuan in the fourth quarter and a net profit of 13.343 billion yuan in 2020.

As for the results that fell short of market expectations, Wang Xiang, president of Xiaomi Group, said that the core reason for the slowdown in the fourth quarter was due to the shortage of chips. "We have been facing very big challenges since the fourth quarter of last year, so it has an impact on performance." Another reason is that Apple did a great job in the fourth quarter, and the iPhone 12 was a hit in both European and global markets, which objectively had an impact.

In the face of chip shortages and challenges, Wang Xiang said that first of all, because of the epidemic, consumers will underestimate the process of slow recovery of economic development, especially smartphones are products with rigid demand, semiconductors are also a long-cycle product, and planning capacity may take 12 months or more, resulting in a shortage of chips.

Lin Zhi, chief analyst at WitDisplay, believes that the "slowdown" is not only caused by a shortage of chips, but also because of "bottlenecks in the millet line and an urgent need for offline breakthroughs," he told Red Weekly.

On March 24, Xiaomi Group also announced five important personnel changes, including Zhou Shouqi, former senior vice president of Xiaomi Group and president of the international department, who resigned as executive director of the group for personal reasons, which has been approved by the board of directors. The post of president of the international department will be taken over by Lu Weibing, partner and senior vice president of Xiaomi Group. At the same time, Lu Weibing will continue to serve as president of China and general manager of Redmi brand. Subsequently, Zhou disclosed on his personal Weibo that he would join byte jump to take up the position of CFO of the company, "to be able to base in my hometown Singapore after 18 years away from home".

Mobile phone revenue and shipments decreased month-on-month.

There is a shortage of chips in both middle and high end.

Wang Xiang said the decline in Xiaomi's smartphone revenue and shipments month-on-month was due to a shortage of chips.

In terms of smartphones, the financial report shows that Xiaomi's smartphone revenue in 2020 reached 152.2 billion yuan, an increase of 24.6% over the same period last year, and Xiaomi's global smartphone shipments increased by 17.5% to 146 million units compared with the same period last year.

The increase in revenue from Xiaomi's smartphone division compared with the same period last year was due to higher sales and ASP (average selling price). During the reporting period, the ASP of Xiaomi smartphones was 1039.8 yuan, compared with 979.9 yuan for the year ended December 31, a year-on-year increase of 6.1%. The rise in ASP is mainly due to increased sales of 5G and mid-to-high-end smartphones in mainland China and some overseas markets. Due to its focus on high-end products, Xiaomi sold nearly 10 million high-end flagship phones priced at 3000 yuan or more and 300 euros or more in 2020.

In the fourth quarter of 2020, Xiaomi's smartphone revenue reached 42.6 billion yuan, an increase of 38.4 percent over the same period last year. Xiaomi shipped 42.3 million smartphones worldwide, up 29.7% from a year earlier. But Xiaomi's smartphone revenue reached 47.6 billion yuan in the third quarter of 2020, up 47.5% from a year earlier, and smartphone shipments reached 46.6 million units in the third quarter, up 45.3% from a year earlier.

Linzhi said that Xiaomi is indeed short of chips, which has a certain impact on its shipments. However, at present, there is no way to solve the shortage of chips, because there are too many chips involved in mobile phones, including power management chips and driver chips, and the prices of these chips are relatively low. therefore, the enthusiasm of the whole contract factory for low-profit chips is relatively low, resulting in the problem of chip shortage. This is the reason that affects the shipments of Xiaomi's middle and low-end mobile phones.

High-end mobile phone Xiaomi also has a shortage of chips, which is different from the reasons for power management chips and driver chips. Linzhi said, "recently, Qualcomm's chips using the most advanced 5nm technology are out of stock, although the profit is high, but because the process is advanced, the overall yield and volume release is not so smooth, resulting in a shortage." Although the introduction of a replacement chip, but the quantity is also limited. "

Sun Yanbiao of the first Mobile phone Research Institute told Red Weekly that the slowdown in Q4 growth is due to the fact that there is a rhythm in the release of new products. For Xiaomi, it is necessary to maintain the pace of product development. In the past, Xiaomi 10 has outstanding performance in Q2 and Q3, ranking among the top five best-selling phones in the range of 3000 yuan to 4000 yuan. Apple, Huawei and Samsung's brand products compete with them, which shows that Xiaomi has stood firm at the top end. At the same time, in the ranking of Q4 best-selling phones, Xiaomi 10 is still in the Top20, which shows that Xiaomi is changing the positioning of Xiaomi in the mobile phone industry in the past, that is, "the launch of new mobile phones is fast, but the life cycle is short", so Xiaomi is extending the life cycle of mobile phones. Next, Xiaomi 10's achievements will be continued by Xiaomi 11.

In addition, Linzhi said that domestic Xiaomi only rely on online, online has encountered growth bottlenecks, domestic offline only layout the number of stores, but did not see a breakthrough in sales, while Huawei released a lot of offline, "Xiaomi is absent, so the growth rate did not meet expectations, there may be this reason." While overseas markets are more dependent on offline channels such as operators, which is the bulk of sales, Xiaomi's profits are too low to fully open up the operators' channels, which may also limit the growth rate.

The layout of the international "powerless"

Leave a "gap" for other manufacturers

In terms of business construction in overseas markets, in 2020, Xiaomi's overseas market revenue was 122.4 billion yuan, an increase of 34.1% over the same period last year, accounting for 49.8% of total revenue. In the fourth quarter of 2020, Xiaomi's overseas market revenue was 33.8 billion yuan, up 27.6% from the same period last year, accounting for 47.9% of total revenue. As of December 31, 2020, Xiaomi's products have been sold to more than 100 countries and regions. According to Canalys, Xiaomi ranked among the top five smartphone shipments in 54 countries and regions in the world in the fourth quarter of 2020. Europe is still Xiaomi's most competitive market at present. In the fourth quarter of 2020, Xiaomi ranked among the top three in the European market by market share for three consecutive quarters.

According to Canalys, Xiaomi's smartphone shipments in Western Europe increased by 57.3% in the fourth quarter of 2020 compared with the same period last year, keeping its market share in the top three. Xiaomi ranked first in smartphone shipments for the fourth consecutive quarter in the Spanish market. In France, Italy and Germany, Xiaomi's smartphone shipments increased by 86.2%, 61.6% and 139.8% year-on-year in the fourth quarter of 2020, respectively. With Western Europe as the center, Xiaomi expands all over Europe. Xiaomi topped the CEE market for the first time in the fourth quarter of 2020, with smartphone shipments accounting for 24.7 per cent of the market, up 17.5 per cent from a year earlier, according to Canalys.

Xiaomi's smartphone shipments in India accounted for 27.4% of the market in the fourth quarter of 2020, ranking first for 13 consecutive quarters, according to Canalys. Xiaomi is also achieving breakthrough growth in emerging markets. Xiaomi ranked fourth in Latin America in smartphone shipments in the fourth quarter of 2020, with year-on-year growth of 215.4 per cent and market share rising to 9.1 per cent from 2.7 per cent in the fourth quarter of 2019, according to Canalys.

Xiaomi continues to optimize channel construction. In online channels, Xiaomi shipped more than 16 million online smartphones in 2020 in markets other than India, an increase of more than 90 per cent year-on-year. In overseas carrier channels excluding India, Xiaomi shipped more than 9 million smartphones, up more than 38 per cent from a year earlier. Xiaomi's channel market share in Western Europe rose from 2.6 per cent in the fourth quarter of 2019 to 7.4 per cent in the fourth quarter of 2020, according to Canalys.

"next, Glory is very strong in China, but it will have problems in overseas markets, and it will not be able to take over Huawei's overseas channels in the short term, so there will be a lot of gaps overseas, opening up opportunities for other manufacturers." Sun Yanbiao said.

The rumor of Xiaomi building a car has not been confirmed.

With the increase of mobile phone shipments, the scale of Xiaomi Internet service users is constantly expanding.

In 2020, Xiaomi's Internet business revenue was 23.8 billion yuan, an increase of 19.7% over the same period last year. In the fourth quarter of 2020, Internet business revenue was 6.2 billion yuan, an increase of 8.4% over the same period last year.

In December 2020, the number of global MIUI monthly active users reached 396 million, an increase of 28.0% over the same period last year. Among them, the number of monthly active users of MIUI in mainland China is 111 million. In January 2021, the number of monthly active users of MIUI in mainland China further increased to 115 million, and the rising trend of users led by mobile phone business gradually appeared.

Represented by the TV Internet business, in December 2020, the number of monthly active users of smart TV and Xiaomi box was 40.9 million, an increase of 48.0% over the same period last year; as of December 31, 2020, the number of paying users of Xiaomi TV reached 4.3 million, an increase of 14.4% over the same period last year.

As the core of Xiaomi's Internet business, Xiaomi's advertising revenue was 12.7 billion yuan in 2020, an increase of 19.2% over the same period last year. In the fourth quarter of 2020, Xiaomi's advertising business reached 3.7 billion yuan, an increase of 23.1% over the same period last year.

In addition, in 2020, Xiaomi's IoT and consumer products business income was 67.4 billion yuan, an increase of 8.6% over the same period last year. In the fourth quarter of 2020, the business income from IoT and consumer products reached 21.1 billion yuan, an increase of 8.0% over the same period last year.

In 2020, we will firmly promote the "Mobile X AIoT" strategy, build a global smart life around the core of the smartphone business, and lead the global smart life tuyere.

Under the global smart life tuyere, Xiaomi revolves around mobile phones as the core, and smart products grow effectively. As of December 31, 2020, the number of IoT devices connected to Xiaomi's AIoT platform (excluding smartphones and laptops) reached 325 million, an increase of 38 per cent over the same period last year. The number of users with five or more connected devices on Xiaomi's AIoT platform (excluding smartphones and laptops) reached 6.2 million, up 52.9% from a year earlier, while the number of monthly active users of App reached 45 million in December, up 22.1% from a year earlier.

Wang Xiang said that the chip shortage, the scope of its impact is relatively large, will also affect IoT products, "this requires us to more accurately define the product and the time to market."

Xiaomi has repeatedly heard the news of "car building". On February 21, Xiaomi announced that the Group has been concerned about the ecological development of electric vehicles and conducted continuous assessment and research on the situation of related industries. The research on electric vehicle manufacturing business has not yet reached the stage of formal establishment. Previously, Xiaomi's share price rose due to rumors of making cars. In this regard, Wang Xiang said at the earnings call, "I do not have updated information, you can refer to that report."