Samsung phone is’flickering’ in the US hitting Xiaomi following Huawei

Input 2021.03.09 06:00

Xiaomi, Huawei quickly encroach on the blank, but
US judges companies controlled by the Chinese Communist Party of Xiaomi
Samsung Electronics’ reflective profits if Xiaomi hits

The U.S. government is stepping up pressure on Xiaomi, following Huawei. Samsung Electronics (005930)Is expected to continue to maintain its No. 1 position in the global market amid the atmosphere that strong competitors in the smartphone market are gradually withdrawn.

According to related industry and market research organizations on the 9th, Xiaomi was the company that saw the most benefits of the’Huawei void’ in the smartphone market last year. Xiaomi is one of the few Chinese companies to settle in overseas markets such as Europe, Southeast Asia, and South America. Looking at Gartner’s recent market share in the global smartphone market in the fourth quarter of last year, Xiaomi (11.3%)’s global sales increased 33.9% from the same period last year.

In particular, Xiaomi’s growth is remarkable in the European market, which was Huawei’s main stage. According to Counterpoint Research, Huawei’s market share in the European smartphone market last year was 12%, down 7 percentage points from the previous year, while Xiaomi’s share rose 7 percentage points to 14%. During the same period, Samsung Electronics (32%), which has the largest market share, only slightly increased by 1 percentage point. In the Chinese smartphone market, Xiaomi was the only company to increase shipments in the third quarter of last year, despite the market’s negative growth.

However, some of the industry predicts that Xiaomi’s advancement will not last long. This is because the pressure from the US government that previously removed Huawei from the smartphone market is shifting to Xiaomi. In January, the U.S. Department of Defense added 9 Chinese companies, including Xiaomi, to the’Chinese Army Link Blacklist’. In other words, it judged Xiaomi as a company owned and controlled by the Chinese Communist Party.

In a recent response to the Washington DC federal court, the U.S. Department of Defense presented the fact that Xiaomi founder Lei Jun was awarded the “Chinese Characteristic Socialist Builder Award” as one of the evidence of its relationship with the Chinese military.

For this reason, Xiaomi was withdrawn from the Financial Times Stock Exchange (FTSE) index, which can receive US investment funds on the 5th (local time). FTSE Russell, a British index company, explained, “In accordance with the additional guidelines of the Foreign Property Management Bureau under the US Treasury Department, Xiaomi and others were excluded from the index constituents.”

Xiaomi, like Huawei, has not yet been on the list of sanctions by the U.S. Department of Commerce, so it seems that there will be no problem procuring parts and software (SW) from outside immediately. However, it is observed that it is likely to be subject to additional regulations if it continues to increase its market share and its presence grows.

Xiaomi aims to dominate the global Internet of Things (IoT) market as well as smartphones. It is implementing a strategy to expand the customer ecosystem by minimizing margins in product sales and connecting the devices sold through IoT. As IoT serves as a core platform for the big data and artificial intelligence (AI) industries, the regulatory justification for the US government is sufficient.

According to a report by the Wall Street Journal (WSJ), the US government believes that the Chinese military is behind Xiaomi’s recent expansion of investment in 5G mobile communications (5G) and AI.

Xiaomi has already sold over 200 million IoT devices to the global market, excluding smartphones. In Korea, various IoT products such as Xiaomi’s robot cleaner, air purifier, light-emitting diode (LED) stand, electric fan, and electric kickboard are gaining popularity.

If Xiaomi is sanctioned by the U.S. Department of Commerce at the same level as Huawei’s, it will lose its manufacturing capacity due to difficulty in procuring parts. The US administration, Joe Biden, even issued an executive order last month to establish a new supply chain, including core materials and parts such as semiconductors and electric vehicle batteries, excluding China and allies.

When Xiaomi is hit in the smartphone market, Samsung Electronics can no longer suffer market share and keep Apple’s pursuit and maintain the No. 1 position in the market. In the high-end phone market, Apple, and in the mid-to-low-end market, it is getting out of the’sandwich’ situation of Chinese companies such as Xiaomi. In the industry, it is analyzed that if not for US sanctions, Huawei would have surpassed Samsung Electronics and occupied the top spot in the global smartphone market last year.

Samsung Electronics’ situation this year is expected to be better than last year. According to Atlas Research & Consulting, the first month sales of the Samsung Galaxy S21 in Korea were 590,000 units, recording the level of sales of the Galaxy S8, a flagship smartphone four years ago. Compared to its predecessor, the Galaxy S20, it is 1.5 to 2 times higher. It is reported that the trend of global sales volume is similar to this. In addition, Samsung Electronics is reinforcing its popular lineup in the global market by releasing the 5G smartphone’Galaxy A42′ in the domestic 400,000 won range on the 12th.

Lee Yun-jung, a researcher at Counterpoint Research, said, “If Samsung strengthens its strategy for the Galaxy S21 series and secures a monopoly position in the mid- to low-end market by strengthening the A series, we can expect more meaningful results this year.”