Judging from Xiaomi being blacklisted: the “core” is higher than the sky and the life is a bit thin

Judging from Xiaomi being blacklisted: the “core” is higher than the sky and the life is a bit thin

A few days ago, 9 Chinese companies including Xiaomi Group were included in the so-called “Chinese military-related” blacklist of the United States.

U.S. President Trump signed an executive order in November 2020 that prohibited U.S. investment in Chinese companies with military backgrounds, and the order also barred U.S. investors from buying shares in these companies.

Although Xiaomi officially issued an announcement for the first time, “Xiaomi company is currently operating normally.” However, as of the close of January 15, Xiaomi’s single-day decline exceeded 10.26%

Image source: Xiaomi Group Announcement

At the beginning of January, Xiaomi also made a wave of publicity because of the sharp rise in the stock price, known as “the first doubling stock for young people”, and Lei Jun even stated in public that “the stock price can rise back, and I am very happy.”

In 2021, the high-opening and low-going, large fluctuations, and the roller coaster-like days are also a microcosm of Xiaomi in recent years.

Accidentally “picked up” and created the myth of Xiaomi

In 2019, Huawei was included in the list of sanctioned entities by the United States. In 2020, the restrictions will be further upgraded, resulting in the inability to produce chips designed by Huawei, and the inability to purchase 7nm and 5nm chips with U.S. production patents, which once put Huawei in the dilemma of no “core” available. As a result, the sales of Huawei’s mobile phones and computers have been seriously hindered, especially in Europe and the United States.

Data source: Xiaomi financial report

But this may be a good opportunity for Huawei’s opponents to find out. From the third quarterly report of 2020 announced by Xiaomi:

Xiaomi’s total revenue in a single quarter reached RMB 175.4 billion, a year-on-year increase of 17.43%;

The net profit attributable to the parent was 11.542 billion yuan, a year-on-year increase of 51.81%.

The overall performance far exceeded market expectations, with as many as 15 performance indicators hitting new highs.

Market analysis believes that the rapid growth of Xiaomi’s performance is related to the company’s rapid acquisition of the market left by Huawei overseas.

When Huawei withdrew from the smartphone market due to external factors, Xiaomi decisively increased marketing expenses to acquire the users left by Huawei. Huawei’s high-end models have been unable to meet consumer demand due to the lack of chips, and this part of the share may also be occupied by Xiaomi’s new flagship models.

In the second quarter of 2019, Xiaomi shipped only 4.3 million units in the European market, with a market share of 9.6%, ranking fourth;

By the second quarter of 2020, Xiaomi’s shipments in Europe have surpassed Huawei’s, reaching 7.1 million units, with a market share of 17%, ranking third.

Image credit: TrendForce

From the perspective of global market share, according to a report by market research firm TrendForce, in the third quarter of 2020, Xiaomi mobile phones accounted for 13.2% of the global market share, making it the third largest mobile phone manufacturer in the world, ranking higher than Apple.

The increase in sales and market share has also made the capital market more optimistic about the Xiaomi model. On January 4, 2021, Xiaomi Group opened at HK$33.6, and then rose all the way to the highest intraday price of HK$35.4, double the issue price of HK$17 that year.

As of the close of the day, it closed at HK$35.25, a single-day increase of 6.17%, with a total market value of about HK$887.8 billion. Lei Jun fulfilled his promise at the celebration party on the first day of listing to “double the profit of those who hold Xiaomi stock”.

On the other hand, the market gap left by Huawei in the domestic market was also undertaken by Xiaomi.

In an interview with the media, Canalys analyst Jia Mo pointed out that Xiaomi will benefit from the market vacancy left by Huawei in a short period of time. In order to prevent Samsung and Apple from becoming bigger and affecting their own right to speak, operators will look for other alternatives, namely domestic brands such as Xiaomi, OPPO, and VIVO.

At the end of last year, Xiaomi Mi 11 series new products were officially released, equipped with Snapdragon 888 processor, Corning Gorilla Glass Victus screen, Wifi6 Internet access, 55W flash charging and other first-level accessories. The price of the top version also came to 4999 yuan. The price of the latest flagship Mate40 (8GB+128GB) is exactly the same, which shows that Xiaomi and Huawei are fighting between each other to a certain extent.

However, a problem that Xiaomi has always been unable to avoid is that it is impossible to compete with first-tier brands such as Apple and Huawei simply by relying on hardware stacking. Even though Xiaomi now has its own selling points, its own user base, and its own supporting IoT products, in the mobile phone market close to the Red Sea, having technical barriers is the only way to be invincible.

Today, Xiaomi has entered the “blacklist” of the United States, and it may not be as easy as before to continue to obtain flagship chips from Qualcomm in the future.

In 2015, Xiaomi confidently launched the top version of the flagship model Xiaomi note equipped with the Snapdragon 810, but due to the serious fever of the 810, this was regarded as Xiaomi’s first The products of this high-end model are innocently lying, and their reputation has declined seriously. Xiaomi Mi 6 has also repeatedly delayed the release due to insufficient production capacity of the Snapdragon 835.

In the future, if Xiaomi, which is being choked by the United States, cannot get Qualcomm’s chips, how can its production and sales be guaranteed? If these two core indicators fluctuate, Xiaomi’s foundation may not be solid.

The “core” is higher than the sky, and the life is a little thin

The reason why the United States put Huawei, Xiaomi, etc. on the “blacklist” is “related to the Chinese military”, but is this really the case?

The answer is not so. As a mobile phone company, it is their dream to have their own chips. Everyone knows that mobile phone chips have always been monopolized by developed countries in Europe and the United States, and their technology has been blocked. In particular, American chips almost occupy the global market. The strangulation was suppressed because Huawei was developing its own chips.

Fortunately, Huawei’s “Kirin Kirin” has been commercialized, and many models including Huawei and Honor equipped with Kirin chips have been sold, and have achieved good results.

Now, this situation has come to Xiaomi. Does Xiaomi also have its own chips?

According to the data, Xiaomi began to develop its own surging chip in 2014. In 2017, it released the Songuo processor surging S1, which was installed on the Xiaomi 5C model.

It launched its own chip in “just three years”, and the Internet once advocated that Xiaomi is a model of “intelligent manufacturing in China”. However, it was later exposed by the media that the predecessor of the Songuo processor was Datang Lianxin, which has been developed by Datang for many years, not the three years as the propaganda said. From a certain point of view, Pinecone is successful, but there is still a distance to truly compete with the four major processors.

The time has come to 2021, Xiaomi has never updated the surging chip, and netizens are speculating whether Xiaomi’s surging chip project has been cancelled. Just before the release of Xiaomi Mi 11, Lei Jun was warming up the Xiaomi Mi 11, saying that the Qualcomm Snapdragon 888 will be launched for the first time, and boasting that its advanced technology is an excellent 5nm chip.

Some netizens reminded in the comment area, “Mr. Lei, what if the United States bans Qualcomm from selling chips? We must prepare early!” Now it seems that the netizens said that this time the United States has included Xiaomi in the sanctions list, it seems that there are A little bit of this crisis.

Image source: Weibo@Lei Jun

Looking back on the past, the road of Chinese mobile phone companies chasing “chips” has not been smooth. Whether it is self-research or investment in joint ventures, no breakthrough has been achieved so far.

Lei Jun once said in public that in the past two years, Xiaomi has invested in 12 smart manufacturing and semiconductor chip companies, and in the past two months, 3 companies have been listed on the Science and Technology Innovation Board. And there are many other semiconductor companies, more than 30 in total!

Obviously, Xiaomi’s intention to “change lanes” for a test run is becoming more and more obvious, but this is not an overnight thing.

Xiaomi still has a tough battle to fight

In fact, Xiaomi is not only facing “core acid”, but also heartache.

Due to the epidemic, the entire mobile phone industry may usher in a comprehensive shortage of goods. Upstream suppliers in Taiwan, South Korea, Japan and other places have limited production capacity, and manufacturers’ stocking capabilities cannot keep up.

According to China Business News, orders placed in mid-2020 will not be available until the beginning of next year, and the longest chip delivery period is more than 10 months. And as the uncertainty of the epidemic persists, this capacity problem will continue into 2021.

Transmission to the side of mobile phone manufacturers means that the components that are in short supply need to be “snatched”.

In the case of lack of production capacity, various manufacturers need to scramble for suppliers. For Xiaomi, this dilemma may be even more embarrassing.

Taking Xiaomi Mi 11 as an example, the Snapdragon 888 chip is from Qualcomm, the screen is from Corning Gorilla, the main camera CMOS is from Samsung HMX, the ultra-wide-angle camera is OV13B10 from OmniVision, the battery is from Sunwoda, and the dual speakers are from Harman Kardon. Almost all core hardware configurations come from peripheral partners, and Xiaomi is more like an “assembly factory”.

Once there is a problem in any of these links, Xiaomi’s supply may not keep up.

On the other hand, Xiaomi is eager to go overseas. With the opening of more channels, or the detonation of more consumer demand, Xiaomi’s shortage problem may become more obvious.

In the Q3 conference call last year, Xiaomi Group President Wang Xiang also responded to the problem of tight production capacity, “The shortage of supply has caused us some troubles. It is indeed out of stock, and we will face the challenge of out of stock in the fourth quarter and even next year.”

In addition to these problems, Xiaomi’s future also needs to be re-examined.

As we all know, 5G is the trend of future communication, especially for mobile phone products. In general, despite the sharp decline in overall mobile phone shipments, 5G mobile phones are still rising against the trend.

According to data released by the China Academy of Information and Communications Technology, from January to October 2020, the cumulative shipment of 5G mobile phones in the domestic market was 124 million, and a total of 183 new models were launched. At a lower level, there is a lot of room for growth.

In the battle for the 5G market, Huawei is far ahead with a market share of 69%, followed by VIVO and OPPO, and Xiaomi’s market share of only 3.5%. importance of business.

Image source: A push big data

At present, there are only five companies with 5G baseband chips, namely Qualcomm, MediaTek, Samsung, Huawei, and Ziguang Zhanrui.

From the above analysis, it can be seen that:

Due to various reasons, Qualcomm and MediaTek do not have high production capacity. Coupled with other factors, the empowerment bonus that can be brought to Xiaomi in the future will be less and less.

Since Samsung and Huawei are also in the mobile phone business, it is no surprise that they must first meet the orders for their own mobile phones before starting to sell chips to other companies.

As for Ziguang Zhanrui, although it has also launched 5G models in cooperation with some mobile phones, the current shipments are not large, and there is no cooperation case with Xiaomi. Even if the two really join forces, I am afraid it will take a period of running-in .

To sum up, when the 5G tide is coming, Xiaomi has entered the “blacklist”. If a group of 5G baseband chip companies cannot cooperate with Xiaomi smoothly, Xiaomi may face the difficulty of producing 5G models. Then, Xiaomi may miss the biggest opportunity in the next five or even ten years.

Since 1996, Nokia’s mobile phone business has been No. 1 in the global market share for 15 consecutive years. In 2008, Nokia also accounted for nearly 50% of the global market share.

Such a giant, in the face of the wave of intelligence, made a wrong move and almost ruined all his previous accumulation. Today, Nokia is almost nowhere to be seen on the street.

Today, Xiaomi is also facing similar problems. The dividends brought by the 5G wave are self-evident. If you can’t get into the car and get a good position, I am afraid that Nokia’s today is Xiaomi’s tomorrow.

A few days ago, 9 Chinese companies including Xiaomi Group were included in the so-called “Chinese military-related” blacklist of the United States.

U.S. President Trump signed an executive order in November 2020 that prohibited U.S. investment in Chinese companies with military backgrounds, and the order also barred U.S. investors from buying shares in these companies.

Although Xiaomi officially issued an announcement for the first time, “Xiaomi company is currently operating normally.” However, as of the close of January 15, Xiaomi’s single-day decline exceeded 10.26%

Image source: Xiaomi Group Announcement

At the beginning of January, Xiaomi also made a wave of publicity because of the sharp rise in the stock price, known as “the first doubling stock for young people”, and Lei Jun even stated in public that “the stock price can rise back, and I am very happy.”

In 2021, the high-opening and low-going, large fluctuations, and the roller coaster-like days are also a microcosm of Xiaomi in recent years.

Accidentally “picked up” and created the myth of Xiaomi

In 2019, Huawei was included in the list of sanctioned entities by the United States. In 2020, the restrictions will be further upgraded, resulting in the inability to produce chips designed by Huawei, and the inability to purchase 7nm and 5nm chips with U.S. production patents, which once put Huawei in the dilemma of no “core” available. As a result, the sales of Huawei’s mobile phones and computers have been seriously hindered, especially in Europe and the United States.

Data source: Xiaomi financial report

But this may be a good opportunity for Huawei’s opponents to find out. From the third quarterly report of 2020 announced by Xiaomi:

Xiaomi’s total revenue in a single quarter reached RMB 175.4 billion, a year-on-year increase of 17.43%;

The net profit attributable to the parent was 11.542 billion yuan, a year-on-year increase of 51.81%.

The overall performance far exceeded market expectations, with as many as 15 performance indicators hitting new highs.

Market analysis believes that the rapid growth of Xiaomi’s performance is related to the company’s rapid acquisition of the market left by Huawei overseas.

When Huawei withdrew from the smartphone market due to external factors, Xiaomi decisively increased marketing expenses to acquire the users left by Huawei. Huawei’s high-end models have been unable to meet consumer demand due to the lack of chips, and this part of the share may also be occupied by Xiaomi’s new flagship models.

In the second quarter of 2019, Xiaomi shipped only 4.3 million units in the European market, with a market share of 9.6%, ranking fourth;

By the second quarter of 2020, Xiaomi’s shipments in Europe have surpassed Huawei’s, reaching 7.1 million units, with a market share of 17%, ranking third.

Image credit: TrendForce

From the perspective of global market share, according to a report by market research firm TrendForce, in the third quarter of 2020, Xiaomi mobile phones accounted for 13.2% of the global market share, making it the third largest mobile phone manufacturer in the world, ranking higher than Apple.

The increase in sales and market share has also made the capital market more optimistic about the Xiaomi model. On January 4, 2021, Xiaomi Group opened at HK$33.6, and then rose all the way to the highest intraday price of HK$35.4, double the issue price of HK$17 that year.

As of the close of the day, it closed at HK$35.25, a single-day increase of 6.17%, with a total market value of about HK$887.8 billion. Lei Jun fulfilled his promise at the celebration party on the first day of listing to “double the profit of those who hold Xiaomi stock”.

On the other hand, the market gap left by Huawei in the domestic market was also undertaken by Xiaomi.

In an interview with the media, Canalys analyst Jia Mo pointed out that Xiaomi will benefit from the market vacancy left by Huawei in a short period of time. In order to prevent Samsung and Apple from becoming bigger and affecting their own right to speak, operators will look for other alternatives, namely domestic brands such as Xiaomi, OPPO, and VIVO.

At the end of last year, Xiaomi Mi 11 series new products were officially released, equipped with Snapdragon 888 processor, Corning Gorilla Glass Victus screen, Wifi6 Internet access, 55W flash charging and other first-level accessories. The price of the top version also came to 4999 yuan. The price of the latest flagship Mate40 (8GB+128GB) is exactly the same, which shows that Xiaomi and Huawei are fighting between each other to a certain extent.

However, a problem that Xiaomi has always been unable to avoid is that it is impossible to compete with first-tier brands such as Apple and Huawei simply by relying on hardware stacking. Even though Xiaomi now has its own selling points, its own user base, and its own supporting IoT products, in the mobile phone market close to the Red Sea, having technical barriers is the only way to be invincible.

Today, Xiaomi has entered the “blacklist” of the United States, and it may not be as easy as before to continue to obtain flagship chips from Qualcomm in the future.

In 2015, Xiaomi confidently launched the top version of the flagship model Xiaomi note equipped with the Snapdragon 810, but due to the serious fever of the 810, this was regarded as Xiaomi’s first The products of this high-end model are innocently lying, and their reputation has declined seriously. Xiaomi Mi 6 has also repeatedly delayed the release due to insufficient production capacity of the Snapdragon 835.

In the future, if Xiaomi, which is being choked by the United States, cannot get Qualcomm’s chips, how can its production and sales be guaranteed? If these two core indicators fluctuate, Xiaomi’s foundation may not be solid.

The “core” is higher than the sky, and the life is a little thin

The reason why the United States put Huawei, Xiaomi, etc. on the “blacklist” is “related to the Chinese military”, but is this really the case?

The answer is not so. As a mobile phone company, it is their dream to have their own chips. Everyone knows that mobile phone chips have always been monopolized by developed countries in Europe and the United States, and their technology has been blocked. In particular, American chips almost occupy the global market. The strangulation was suppressed because Huawei was developing its own chips.

Fortunately, Huawei’s “Kirin Kirin” has been commercialized, and many models including Huawei and Honor equipped with Kirin chips have been sold, and have achieved good results.

Now, this situation has come to Xiaomi. Does Xiaomi also have its own chips?

According to the data, Xiaomi began to develop its own surging chip in 2014. In 2017, it released the Songuo processor surging S1, which was installed on the Xiaomi 5C model.

It launched its own chip in “just three years”, and the Internet once advocated that Xiaomi is a model of “intelligent manufacturing in China”. However, it was later exposed by the media that the predecessor of the Songuo processor was Datang Lianxin, which has been developed by Datang for many years, not the three years as the propaganda said. From a certain point of view, Pinecone is successful, but there is still a distance to truly compete with the four major processors.

The time has come to 2021, Xiaomi has never updated the surging chip, and netizens are speculating whether Xiaomi’s surging chip project has been cancelled. Just before the release of Xiaomi Mi 11, Lei Jun was warming up the Xiaomi Mi 11, saying that the Qualcomm Snapdragon 888 will be launched for the first time, and boasting that its advanced technology is an excellent 5nm chip.

Some netizens reminded in the comment area, “Mr. Lei, what if the United States bans Qualcomm from selling chips? We must prepare early!” Now it seems that the netizens said that this time the United States has included Xiaomi in the sanctions list, it seems that there are A little bit of this crisis.

Image source: Weibo@Lei Jun

Looking back on the past, the road of Chinese mobile phone companies chasing “chips” has not been smooth. Whether it is self-research or investment in joint ventures, no breakthrough has been achieved so far.

Lei Jun once said in public that in the past two years, Xiaomi has invested in 12 smart manufacturing and semiconductor chip companies, and in the past two months, 3 companies have been listed on the Science and Technology Innovation Board. And there are many other semiconductor companies, more than 30 in total!

Obviously, Xiaomi’s intention to “change lanes” for a test run is becoming more and more obvious, but this is not an overnight thing.

Xiaomi still has a tough battle to fight

In fact, Xiaomi is not only facing “core acid”, but also heartache.

Due to the epidemic, the entire mobile phone industry may usher in a comprehensive shortage of goods. Upstream suppliers in Taiwan, South Korea, Japan and other places have limited production capacity, and manufacturers’ stocking capabilities cannot keep up.

According to China Business News, orders placed in mid-2020 will not be available until the beginning of next year, and the longest chip delivery period is more than 10 months. And as the uncertainty of the epidemic persists, this capacity problem will continue into 2021.

Transmission to the side of mobile phone manufacturers means that the components that are in short supply need to be “snatched”.

In the case of lack of production capacity, various manufacturers need to scramble for suppliers. For Xiaomi, this dilemma may be even more embarrassing.

Taking Xiaomi Mi 11 as an example, the Snapdragon 888 chip is from Qualcomm, the screen is from Corning Gorilla, the main camera CMOS is from Samsung HMX, the ultra-wide-angle camera is OV13B10 from OmniVision, the battery is from Sunwoda, and the dual speakers are from Harman Kardon. Almost all core hardware configurations come from peripheral partners, and Xiaomi is more like an “assembly factory”.

Once there is a problem in any of these links, Xiaomi’s supply may not keep up.

On the other hand, Xiaomi is eager to go overseas. With the opening of more channels, or the detonation of more consumer demand, Xiaomi’s shortage problem may become more obvious.

In the Q3 conference call last year, Xiaomi Group President Wang Xiang also responded to the problem of tight production capacity, “The shortage of supply has caused us some troubles. It is indeed out of stock, and we will face the challenge of out of stock in the fourth quarter and even next year.”

In addition to these problems, Xiaomi’s future also needs to be re-examined.

As we all know, 5G is the trend of future communication, especially for mobile phone products. In general, despite the sharp decline in overall mobile phone shipments, 5G mobile phones are still rising against the trend.

According to data released by the China Academy of Information and Communications Technology, from January to October 2020, the cumulative shipment of 5G mobile phones in the domestic market was 124 million, and a total of 183 new models were launched. At a lower level, there is a lot of room for growth.

In the battle for the 5G market, Huawei is far ahead with a market share of 69%, followed by VIVO and OPPO, and Xiaomi’s market share of only 3.5%. importance of business.

Image source: A push big data

At present, there are only five companies with 5G baseband chips, namely Qualcomm, MediaTek, Samsung, Huawei, and Ziguang Zhanrui.

From the above analysis, it can be seen that:

Due to various reasons, Qualcomm and MediaTek do not have high production capacity. Coupled with other factors, the empowerment bonus that can be brought to Xiaomi in the future will be less and less.

Since Samsung and Huawei are also in the mobile phone business, it is no surprise that they must first meet the orders for their own mobile phones before starting to sell chips to other companies.

As for Ziguang Zhanrui, although it has also launched 5G models in cooperation with some mobile phones, the current shipments are not large, and there is no cooperation case with Xiaomi. Even if the two really join forces, I am afraid it will take a period of running-in .

To sum up, when the 5G tide is coming, Xiaomi has entered the “blacklist”. If a group of 5G baseband chip companies cannot cooperate with Xiaomi smoothly, Xiaomi may face the difficulty of producing 5G models. Then, Xiaomi may miss the biggest opportunity in the next five or even ten years.

Since 1996, Nokia’s mobile phone business has been No. 1 in the global market share for 15 consecutive years. In 2008, Nokia also accounted for nearly 50% of the global market share.

Such a giant, in the face of the wave of intelligence, made a wrong move and almost ruined all his previous accumulation. Today, Nokia is almost nowhere to be seen on the street.

Today, Xiaomi is also facing similar problems. The dividends brought by the 5G wave are self-evident. If you can’t get into the car and get a good position, I am afraid that Nokia’s today is Xiaomi’s tomorrow.

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