Why Xiaomi can't rest easy despite the 'hot' new Mi10 phones

February 19, 2020 14:35
Xiaomi and other Chinese smartphone makers could face new challenges as the US mulls further tech-related export controls. Photo: Reuters

Smartphone maker Xiaomi has launched its much-awaited 5G-capable Mi10 devices in China and enjoyed good consumer response on all the online shopping platforms in the country. 

The company will be pleased with the demand, yet it confronts a broader challenge and uncertain prospects overall. The reason: the Trump administration in the United States is said to be mulling new curbs that could result in Chinese tech firms getting blocked from using components made with US equipment. 

Chip supplies, among other things, could get disrupted in the worst-case scenario, affecting the Chinese smartphone industry.

On Feb. 13, Xiaomi launched its Mi10 series smartphones in an online event. The new flagship marks the first handset in the world that comes with Qualcomm Snapdragon 865 platform. The phone supports the latest 5G mobile technology, enabling users to browse the internet at faster speed.

In addition, Mi10 comes with a four-camera system featuring a 108-megapixel main camera. That is a significant upgrade from Xiaomi’s 2019 flagship Mi9 which used a 64-megapixel camera. The Mi10 Pro camera has secured the highest mark from DXOMark, a camera assessment firm, making it the best camera phone in the market.

On Tuesday morning, Xiaomi kicked off sales of Mi10 Pro on all online shopping platforms. In less than a minute, the gadget drew in orders worth 200 million yuan in total, according to reports. Last Friday, Xiaomi took a minute to achieve 200 million yuan sales during the Mi10 debut.

Chairman and CEO Lei Jun has said that preparation for shipment of the Xiaomi Mi 10 series was done carefully one month before the release. The entrepreneur believes the production capacity is sufficient, but the reality is that resumption of factory operations has not been smooth in the wake of the coronavirus crisis in China. Supplies could be tight in the near term.

The Mi10 series celebrates the 10th anniversary of Xiaomi. Ten years ago, Lei and partners established Xiaomi in Beijing, aiming to capture the unfolding smartphone demand. After facing criticism for being an Apple copycat and replicating the iPhone look, Xiaomi has been strengthening its research and development capability to enhance its products. The 108-megapixel camera system marks a good example of how Xiaomi is trying to be a top player in the market.

Xiaomi has been suffering on brand image in the past few years as the company was mostly known for “low-cost flagship” products. While users were able to enjoy advanced mobile technology at the cheapest price, Xiaomi however fell behind top rivals.

Huawei and OnePlus have been upgrading their product offerings to catch up with foreign players like Samsung and Apple. As for Xiaomi, it had to strike a balance between product features and price. Hence, the Xiaomi camera did not come with expensive features like optical stabilization and optical zoom.

Xiaomi brand faced further pressure after the company opted to build Redmi as an independent brand focusing on the mass market. Redmi used to be a sub-brand of Xiaomi but after becoming a standalone brand, it successfully built up an image of flagship killer.

Redmi launches flagship models to compete with rivals by using the top mobile processor but at an exceptionally low price. For example, Redmi K30 5G is the first in the market using Qualcomm 765G processor and the price starts at 1,999 yuan.

Given the market realities, Xiaomi brand needs to avoid directly competing with Redmi, and "going premium" is the only way it can do so in the future.

But there is another, far bigger, potential problem on hand. The future of Xiaomi and other Chinese smartphone makers is up in the air as the US government has indicated that it might block the use of American chip-making equipment from catering to the needs of Chinese technology firms, as it seeks to cut off Chinese access to key semiconductor technology.

The proposal is initially said to be aimed at Huawei Technologies, with restrictions likely to be placed on US chipmakers from supplying to the Chinese telecoms equipment giant.

If the Trump administration extends the arrangement to all other Chinese tech firms, Xiaomi will be among those severely affected, as it might be unable to adopt the latest mobile technology developed by Qualcomm and other US tech entities.

As he revels in the hot market response to the Mi10 series, Xiaomi's CEO Lei may need to think about a contingency plan to partner with other mobile processor developers such as Mediatek to prepare for the worst.

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EJ Insight writer