Xiaomi plans to ship 240 million mobile phones next year, surpassing Apple and Huawei

Huawei's biggest Chinese smartphone competitor is sharply increasing factory orders for next year in a bid to achieve bold growth and potentially pose a threat to Apple in a fiercely competitive consumer market, Nikkei Asian Review reported.

Xiaomi, the world's fourth-largest smartphone maker, has been in talks with suppliers to pre-order parts for 240 million smartphones, sources told Nikkei Asian Review. The figure far exceeds Xiaomi's production this year and would exceed Apple's average annual iPhone shipments - a sign of the company's ambition to overtake Huawei, which is struggling under U.S. sanctions.

Xiaomi raised $3.06 billion in Hong Kong on Wednesday, the city’s largest ever rights issue, suggesting the company may need more firepower to fund its bold expansion plans. Trading in Xiaomi shares was suspended without explanation the same day.

Xiaomi has told suppliers that its internal goal for next year is to ship 300 million smartphones, according to people familiar with the matter. But that level seems unlikely to be achieved. Qualcomm and MediaTek, the main chip suppliers for Xiaomi, Oppo, Vivo and Samsung, cannot supply so many mobile processor chips to one company when the entire technology supply chain is facing component shortages.

In addition, Xiaomi is not the only Chinese brand trying to take advantage of Huawei's problems to grab export markets. Another person familiar with the matter told Nikkei Asian Review that OPPO has revealed that it expects to produce about 170 million smartphones next year, an increase of nearly 50% from 114.3 million units shipped in 2019. 

Xiaomi and OPPO both declined to comment on the matter.

IDC data shows that in the third quarter of this year, Huawei's smartphone shipments fell 22% year-on-year, and its global market share fell from 18.6% to 14.7%. Although some suppliers, including Qualcomm and Sony, have obtained supply licenses, its mobile phone sales are still expected to decrease this quarter.

Source: Nikkei Asia/IDC and Statista

Meanwhile, Xiaomi posted record revenue of 72.2 billion yuan in the July-September period. The company attributed its strong performance to overseas sales, which grew more than 50% year-on-year. Net profit rose nearly 19% year-on-year to 4.1 billion yuan, another quarterly record. Xiaomi surpassed Apple for the first time in the quarterly rankings, becoming the world's third-largest smartphone maker after Samsung Electronics and Huawei.

The entire smartphone market is expected to shrink 9.5% this year, according to IDC, but Brady Wang, an analyst at Counterpoint Research, said the smartphone market is expected to recover for the first time since 2017 next year, possibly growing 10%.