Xiaomi said Tuesday it has resumed production capacity by 80% to 90%. However, they also warned that demand for smartphones in overseas markets would be hit by the spread of Covid-19 in March and April.

Why it matters:ย The Beijing-based smartphone maker has a strong presence in overseas markets such as India and Europe. It is likely to see a drop in sales in the first half of the year as the pandemic spreads around the world.

  • The company is selling the idea that smartphones are necessary goods and demand will bounce back after theย pandemic is over.
  • โ€œSmartphone is becoming a basic necessity and the demand for it should resume soon in India and Europe. We are optimistic about the growth in overseas markets,โ€ Wang Xiang, president of Xiaomi, told reporters and analysts in an earnings call Tuesday.

Read more: Xiaomi wants to be exempted from an e-commerce ban in India

Details: Xiaomiโ€™s production was severely impacted in February when the coronavirus outbreak intensified in China, but its production capacity has been resumed to 80% to 90% of the normal state, according to Wang.

  • He said sales of smartphones in the domestic market have also bounced back to 80% to 90%.
  • Wang expects that the demand for smartphones in India and Europe will see a drop in March and April, but expects a recovery to begin by May.
  • The company said Tuesday its revenue for the fourth quarter rose 27.1% year on year to RMB 56.5 billion (around $8 billion), slightlyย higherย than analystsโ€™ average estimation of RMB 54.9 billion.
  • The company booked a net income of RMB 2.3 billion in the period, a year-on-year increase of 26.5%.
  • Revenues at Xiaomiโ€™s smartphone business rose 22.8% year on year to RMB 30.8 billion in the quarter.
  • The company said it sold 32.6 million smartphones in the quarter, a 30.5% rise compared with the same period of 2018. Its smartphone shipments for last year were 124.6 million units in total.

Context: Market research firm IDC estimated that smartphone sales in China may fall as much as 40% in the first quarter compared with the same period last year.

  • Xiaomiโ€™s share price has dropped more than 22% since the beginning of March.
  • To avoid sales loss in India, Xiaomiโ€™s biggest overseas market, the company has asked New Delhi to list smartphones as an essential commodity so that they can be sold on e-commerce platforms during the nationwide lockdown in India.

Writing about semiconductors and telecommunications.