Xiaomi takes advantage of Huawei’s woes

LEI JUN, THE founder and boss of Xiaomi, a Chinese smartphone-maker, has long had something of an inferiority complex. For a decade Xiaomi has played second fiddle to Huawei, a rival Chinese producer of handsets. In a recent live-streamed address watched more than 30m times, Mr Lei admitted that his firm is not yet “in the same league” as Huawei. The audience, comprising mainly “Mi fans” (as devotees of Xiaomi products are known), booed the dispiriting assessment. That prompted Mr Lei to change tack, quickly adding that “you will find lots of things we do well”.

Investors are not complaining. Xiaomi’s share price has doubled since June. Its value surged to $80bn on November 5th. The main explanation is the flagging performance of none other than Huawei, which has been cut off from a critical resource—mobile chips—after export restrictions imposed by America came into effect on September 15th. The regulations prohibit chip manufacturers whose products contain American technology, including suppliers outside America, from selling to Huawei, which is accused of acting on behalf of the Communist Party. The chokehold is likely to depress Huawei’s sales for the foreseeable future.

Xiaomi is better insulated from the geopolitical storm. Unlike Huawei, which sells telecoms gear to foreign network operators, Xiaomi runs only a...

via Business Feeds

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