On Tuesday Chinese smartphone maker Xiaomi reported it earned 55% of its third quarter revenues from markets outside of China, marking the first time in the company’s ten-year history that contributions from the brand’s overseas business surpassed domestic ones.
“Excluding India, where we have been the number one smartphone brand for 13 consecutive quarters, our overseas smartphone shipments almost doubled on a year-over-year basis,” Xiaomi chief financial officer Alain Lam said during an investor call Tuesday. The smartphone maker reported $10.97 billion in revenue for the third quarter, logging a 34.5% increase over last year.
Western Europe, where Xiaomi sales soared 107% over the previous year, contributed significantly to revenue growth. According to the company, Xiaomi is now the third best-selling brand in the region, occupying 13.3% of the market.
Xiaomi says it is the second-most popular brand in Italy, third in France, fourth in Germany, and has been Spain’s preferred smartphone brand for three quarters.
Xiaomi’s growth in Europe, and overall throughout the third quarter, came at the expense of its rival and compatriot, Huawei Technologies, which was hit with trade embargos by the Trump administration.
Washington views Huawei as a national security threat fearing the Shenzhen-based telecom maker’s equipment could be tapped by Beijing’s spies. The White House has tried to curtail Huawei’s business by forbidding companies from selling U.S. technology—such as semiconductors—to the firm.
“Xiaomi will be a strong beneficiary if the U.S. keeps up the pressure on Huawei, and what we’ve seen in the last quarter would indicate that’s the case,” says Dan Baker, a senior equity analyst at Morningstar Research.
According to market tracker Canalys, Huawei’s global smartphone shipments declined by 15.1 million units in the third quarter while Xiaomi’s rose by 14.5 million, suggesting an equilibrium between the two. In Europe—Huawei’s biggest overseas market—Huawei shipments dipped 25% while Xiaomi’s rose 88%.
Xiaomi, once derided as an iPhone imitator, now sits as the third-largest smartphone maker in the world, pushing Apple into fourth place for third quarter shipments. Whether Xiaomi can stay there depends on several factors—not least of them the later-than usual release of the iPhone 12, which should drive Apple’s fourth quarter shipments.
Washington also has permitted U.S. chipmaker Qualcomm to provide Huawei with low-spec chipsets, which could help ease the pressure on Huawei’s component supplies. Meanwhile, according to the South China Morning Post, Xiaomi president Wang Xiang warned the company faces a “serious supply shortage” in its fourth quarter.
The shortage could be due to the pandemic forcing factories to close in India, which is Xiaomi’s largest market by unit shipments. Sales in the subcontinent, where Xiaomi has been the number one smartphone brand for thirteen quarters, bolstered Xiaomi’s previous position as the world’s fourth largest smartphone company.