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: 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 the pandemic is over.
  • “Smartphone 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,” 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: Xiaomi’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), slightly higher than analysts’ 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 Xiaomi’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.

  • Xiaomi’s share price has dropped more than 22% since the beginning of March.
  • To avoid sales loss in India, Xiaomi’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.