Smartphone maker Xiaomi announced on Wednesday that it witnessed a 64 percent increase year-over-year in the second quarter, and announced that it was acquiring Deepmotion, an automated driving startup, as part of its plan to expand into the automobile market.
Xiaomi’s sales increased from 53.54 billion yuan realized a year earlier to 87.8 billion yuan, surpassing analyst expectations of 84.53 billion yuan. Net income reached 6.32 billion yuan, up 87.4 percent year-over-year, also exceeding analysts’ forecast.
Xiaomi benefitted from the sanctions imposed on rival company Huawei by the U.S. government. While Huawei’s performance was seriously affected, Xiaomi was able to increase its market share with Chinese Android makers Oppo and Vivo.
According to research firm Canalys, Xiaomi’s share of the global smartphone market increased 83 percent year-on-year in the quarter ending June. It shipped 52.8 million phones, making it the world’s second-selling brand for the first time in history, beating the likes of Samsung and Apple. Domestically, however, the company still ranks behind Oppo and Vivo in terms of raw unit shipments.
According to Xiaomi’s President, Wang Xiang, Deepmotion will be acquired for approximately $77.37 million, in a bid to boost the company’s R&D efforts in the automobile sector. In March, Xiaomi announced that it would spend $10 billion to enter the electric vehicle sector. The company has not formally announced any partnerships or plans for its first model, though public posts on job-searching sites show that the company is actively hiring skilled individuals. Xiaomi said it has been discussing with various vehicle makers but is yet to choose which company it will work with. Reportedly, China Evergrande Group was in talks to sell its EV unit to Xiaomi.
The majority of Xiaomi’s revenue comes from the sale of its smartphones and it also makes money by selling online ads and other types of consumer hardware. Notably, Xiaomi experienced a 19.1 percent year-over-year growth in its internet services unit, which makes money primarily by placing ads across various apps.
Entering the automobile market space, no doubt will only mean more revenue for the company.