Beijing: Xiaomi Corp. Ltd.'s quarterly revenue plunged nearly 10% as it grapples with a faltering global smartphone market and weak domestic consumer demand.

The Beijing-based company reported quarterly sales of 70.5 billion yuan ($9.85 billion), a net loss of 1.5 billion yuan, and write-downs of nearly 3 billion yuan for things like investment losses.

Analysts had predicted revenue of 70.2 billion yuan and an average net profit of 1.8 billion yuan. Adjusted net income missed analysts' expectations.

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The Covid-zero policy in China has disrupted the country's supply chain and tech industry, reducing economic activity. Electronics demand is also declining as consumers respond to high inflation and sluggish economic growth.

Global smartphone sales are expected to decline by 2.9% in 2019, after falling 12.2% in 2022, according to a report this month from Jefferies. According to Jefferies, Xiaomi's unit sales will fall this year before a slight increase in 2024.

According to Jefferies analysts including Addison Lee and Nick Cheng, phones sold in recent years are well made, negating the need for customers to buy new ones, they wrote in a Nov. 9 note. According to him, new models do not add many new innovations.

The challenges "are compounded by a weak economy," analysts said, adding that structural weakness is worse than anticipated.
Xiaomi experienced its first drop in sales in the first quarter, which was followed by a 20% drop in the June quarter.

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Even the leaders of the world are not untouched by this. Samsung Electronics Co., the world's biggest producer of phones, displays and memory, cited declining handset sales in China as a drag on its components business.

People with knowledge of Apple's plans have said the company expects to produce at least 3 million fewer iPhone 14 handsets this year than initially projected, mainly due to weaker demand for more affordable variants of the model as a result of.

Since the start of the year, Xiaomi's stock has lost half its value, bringing the electronics giant's market capitalization to around US$31 billion.

Nevertheless, due to its greater international reach and distribution, it has outperformed some of its domestic rivals in the phone manufacturing industry, including Oppo and Vivo.

Xiaomi co-founder and CEO Lei Jun has made electric vehicles a compass for Xiaomi for future growth, pledging to invest US$10 billion and create a separate company for the effort.

But because that project will take years to complete, the business will have to rely on increased consumer spending on electronics to turn its declining fortunes.

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Sales of Android smartphones, where Xiaomi competes against Samsung in international markets, are not expected to pick up anytime soon, especially not in China.