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Chip shortage to end this year – at least for us: Xiaomi

China's smartphone and IoT gadget champ says it might even see a glut by 2023

Chinese smartphones-and-more manufacturer Xiaomi believes its silicon supply chain will return to normal in the second half of 2022 – and by next year it may even have an embarrassment of riches to consider when it shops for components.

Speaking on the company's Q4 2021 earnings call, company president Wang Xiang said "the supply situation will be improved in 2022 – especially in the second half of 2022. In the first half, especially in Q1, we are still facing a great challenge in supply. But starting from Q2, the supply situation will be changed significantly. Q3 and Q4, we'll have a lot of supplies."

Xiang added that a year from how he expects no problems, and possibly even an oversupply of the components the company needs to crank out its kit. The president predicted that logistics issues will also ease.

But shortages and bottlenecks made for a tricky Q4 and difficult FY 2021.

Q4 revenue landed at ¥85,575 million ($13.4B), which represented 21.4 per cent year-on-year growth – rather less than the 24.8 per cent revenue improvement recorded in Q4 2020. Full year revenue reached $51.6 billion and grew 33.5 per cent year on year, which was a bigger jump than the 19.4 per cent year-on-year improvement between FY 2019 and FY 2020. But operating profit grew just 8.3 per cent during 2021, down from the 104 per cent surge the year before.

Despite attempts to diversify its business, smartphones also continued to dominate Xiaomi's affairs. They accounted for 63.9 per cent of its revenue – up from 61.9 per cent in 2020.

The company exited 2021 as the world's third most prolific smartphone vendor, according to analyst firm Canalys, and shipped 190 million units to win 14.1 per cent market share.

Execs said that easing supply chain challenges should see that number grow in 2022. They took great heart from topping sales charts in Spain, winning second place in France and Italy, and third place in Germany.

At home in China, the company highlighted its top positions in the smartlock and robot vacuum cleaner markets as successes worth sharing with investors. IoT and other kit contributed 25.9 per cent of the company's revenue, which is 1.5 per cent less than the year before.

Looking a little further out to 2024, CFO Alain Lam said the company will launch its own smart electric vehicle. Over 1,000 staff are currently working on the battery-powered conveyance.

Xiaomi's views on the tech supply chain are rosier than many, but also not unrealistic. The companies complaining of the longest delays have stated their difficulties derive from foundries prioritizing higher-margin consumer products like PCs and smartphones rather than knocking out smaller batches for silicon that powers routers. The automotive sector's annual production of around 80 million vehicles is also dwarfed by the global smartphone market's 1.3–1.4 billion unit annual output – which may explain why car-makers are still reporting shortages but Xiaomi sees sunlit uplands ahead. ®

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