Xiaomi reported on Tuesday better-than-expected revenue of RMB 72.2 billion (around $11 billion) for the third quarter, the fastest growth the Chinese smartphone maker has seen since its 2018 listing.

Why it matters: The strong performance shows how the Beijing-based company has benefited following US sanctions imposed on its archrival Huawei. Xiaomi’s global smartphone shipments grew 45% year on year to 47.1 million units in the third quarter while Huawei’s fell 23% year on year to 51.7 million units, according to market research firm Canalys.

  • However, Xiaomi President Wang Xiang warned of a “supply chain shortage” in the fourth quarter during an earnings call late Tuesday. Wang did not provide further details but said the difficulty could last until next year.
  • Unlike Huawei, which has been essentially cut off from the global semiconductor supply chain because of US sanctions, Xiaomi is free of geopolitical tensions. 

Details: Revenue for the world’s third-biggest smartphone vendor in the September quarter grew 34.5% year on year, said the company in a filing with the Hong Kong exchange Tuesday.

  • More than half of Xiaomi’s third-quarter revenue came from overseas markets, which grew 52.1% year on year to RMB 39.8 billion, the company said. Its smartphone shipments in Europe grew 90.7% year on year in the same period, seizing an 18.7% market share, said the company, citing Canalys data.
  • Xiaomi’s adjusted net income for the quarter grew 18.9% year on year to RMB 4.1 billion, according to the unaudited results. Shares of the company more than doubled this year.

Context: Xiaomi beat Apple to rank the world’s third-largest smartphone vendor in the third quarter behind South Korea’s Samsung and Huawei, according to Canalys.

  • The company is also expected to benefit from the sale of Honor, Huawei’s budget phone brand, just last week. Analysts suggested that the company could gain around 15 million units in additional smartphone shipments because of Honor’s exit.
  • Xiaomi’s Wang said during the Tuesday earnings call that the company has no plans to change its market strategy because of the Honor sale. “We were also informed by the media that Huawei sold Honor. Anyway, our strategy is unchanged and I don’t see the necessity to change it,” he said.

Writing about semiconductors and telecommunications.