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Xiaomi diversification rumours drive share price increase

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Chinese electronics manufacturer Xiaomi is diversifying into electric vehicles and computer chips.

 

The news comes after a series of announcements over recent days, the latest of which saw the company's share price increase 6.3%.

Xiaomi Corp released financial results earlier this week, showing total sales increased by a significant stretch, coming in 25% higher at $10.79 billion.

Its internet services unit, which houses the fintech business, saw revenue increase 8% in Q4 and smartphone sales, which account for the bulk of Xiaomi’s revenue, increased 38% to 42.6 billion yuan. Shipments in China increased by 52% year on year, due to market share wins over Huawei, and Xiaomi now holds 15% of the domestic market.

During the earnings call on Wednesday the issue of global chip supplies was raised. Company president Wang Xiang said: “To be honest, we will do our best to offer the best price we can to consumers. But sometimes, we may have to pass part of the cost increase to the consumer in different cases.

“We are feeling pressure, but we are looking okay,” he continued.

Xiang confirmed the shortage had increased costs and impacted quarterly revenue results.

Then via its Weibo account on Friday local time, Xiaomi Corp confirmed its first computer chip would be revealed on Monday, 29 March.

Meanwhile sources have told Reuters that plans are also in the pipeline to manufacture electric vehicles (EV), under the Xiaomi brand, but using a factory belonging to Great Wall Motor Co Ltd.

Xiaomi did not supply a comment to Reuters and Great Wall denied the claims in an exchange filing late Friday.

However, Xiaomi's share price increased 6.3% on the news, so if the company was looking to gauge market sentiment, it certainly got its answer. Meanwhile Great Wall’s Hong Kong stock closed 10.4% higher and its Shanghai shares increased by their maximum 10% daily limit.

 

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