Xiaomi's Fierce Pursuit: Why It First Appeared as a Major Revenue Source for Samsung

[Image source=Yonhap News]

Chinese company Xiaomi has been named as a ‘major revenue source’ for Samsung for the first time. As Xiaomi has recently shown rapid growth in the global smartphone market, it has emerged as a key customer for Samsung Electro-Mechanics, a core component supplier.

According to industry sources on the 20th, Samsung Electro-Mechanics mentioned Xiaomi as a major revenue source for the first time in its recently released semi-annual report for the first half of this year. Until now, Samsung Electro-Mechanics had only listed ‘Samsung Electronics and its subsidiaries’ under major revenue sources, but Xiaomi was added for the first time in this year’s first half report. Samsung Electro-Mechanics currently supplies Xiaomi with camera modules and multilayer ceramic capacitors (MLCC) used in flagship models.

Samsung Electro-Mechanics stated that the combined revenue share from its major customers, Samsung Electronics and Xiaomi, accounted for 40.5% of total sales as of the end of the first half of this year. The newly disclosed revenue share from Xiaomi accounted for 14.2% of Samsung Electro-Mechanics’ total sales. A Samsung Electro-Mechanics official explained the background for listing Xiaomi as a major revenue source, saying, "The revenue share from Xiaomi has increased compared to before."

During the same period, the revenue share from Samsung Electronics, the largest shareholder of Samsung Electro-Mechanics, was recorded at 26.3%. Just three years ago, the revenue share from Samsung Electronics exceeded half of the total sales. Due to the high dependence on Samsung Electronics, the company had been criticized for vulnerability to external volatility and has been pursuing customer diversification. In the first quarter, the revenue share from Samsung Electronics dropped to 29.7%, falling into the 20% range for the first time. This share was further reduced as of the first half of this year.

[Image source=Reuters Yonhap News]

This change appears to be closely related to Xiaomi’s rapid rise in the smartphone market. According to market research firm Omdia, Xiaomi’s shipment share in the global smartphone market was 17%, ranking second. Despite COVID-19, its shipments increased by 73% year-on-year, surpassing Apple, which was previously in second place, and narrowing the gap with Samsung Electronics to 2 percentage points. Another market research firm, Counterpoint Research, also reported that Xiaomi overtook Samsung Electronics in the European region during the second quarter to become the number one smartphone market share holder.

Along with Xiaomi’s growth, Samsung Electro-Mechanics’ related revenue share is also increasing. Samsung Electro-Mechanics is expanding sales related to Chinese smartphone companies including Xiaomi, Oppo, and Vivo. Previously, in 2019, Samsung Electro-Mechanics received the highest award for partners, the ‘Best Strategic Cooperation Award,’ from Xiaomi.

When announcing its second-quarter results last month, Samsung Electro-Mechanics reported that sales in the module division increased by 47% year-on-year due to expanded supply of multi-camera modules, folded zoom, and high-resolution optical image stabilization (OIS) camera modules for Chinese customers. In the earnings conference call, Samsung Electro-Mechanics stated, "The Chinese market in the third quarter presents opportunities such as new model launches by Chinese customers, but uncertainties remain regarding set production due to the resurgence of COVID-19 and semiconductor supply issues for mobile devices." The company added, "We will respond swiftly to the needs and demand fluctuations of major customers by strengthening local responsiveness in China."

This content was produced with the assistance of AI translation services.