Chinese smartphone maker Xiaomi Corp (小米) yesterday said it is working with suppliers to overcome component supply constraints in its bid to double annual shipments to more than 15 million units this year.
Xiaomi, a private company established three years ago in Beijing, shipped 7.19 million phones last year. The company mostly sells its products online in China and has gained a huge following via its social networking platform.
“We have to soothe the overwhelming amount of customer complaints about the unavailability of our phones, which means we have to increase production,” Xiaomi co-founder and president Bin Lin (林斌) said on the sidelines of a media briefing to introduce the company’s latest smartphone in Taipei.
Xiaomi is grappling with short supplies in some key components for its products, such as memory chips and advanced voice coil motors, Lin said. When the company launched its second handset last year, supplies of the Qualcomm Inc 28-nanometer chips that it needed were insufficient, he said.
“The scarcity of component supplies is an industrywide problem that severely affects us,” Lin said. “Since we use the same key components as global brands like Apple [Inc,] Samsung [Electronics Co] and Motorola [Inc], we have to check with our suppliers earlier this year.”
Taiwan’s Hon Hai Group (鴻海集團) and Inventec Appliance Corp (英華達) assemble smartphones for Xiaomi, with key component suppliers for the Chinese firm including touch panel makers TPK Holdings Ltd (宸鴻) and Wintek Corp (勝華), handset camera lens maker Largan Precision Co (大立光) and camera module maker Lite-On Technology Inc (光寶), Lin said.
TPK and Largan are major suppliers for Apple as well.
Separately, Lin said that Xiaomi is planning to set up a local branch in Taiwan sometime this year to provide product maintenance services for local customers.
Xiaomi is set to start selling its smartphones on a Web site registered in Taiwan next month after starting to offering its latest phone, dubbed the 2S, this month in collaboration with Far EasTone Telecommunications Co (遠傳電信), the nation’s No. 3 telecommunications operator.
“Taiwan is a good test ground for Xiaomi’s overseas expansion as the market is very similar to those in the US and Europe, where telecoms operators have a greater say in selling mobile phones,” Lin said.
In China, since 70 percent of mobile phones are sold without bundling service packages from telecoms companies, Xiaomi has adopted the approach of only selling its phone online, which saves it the cost of opening retailing outlets and spending on marketing, he said. This allows the company to price its handsets at 60 percent less than the same-spec products offered by its global rivals, Lin added.
Xiaomi employs 2,400 workers, half of which are in research and development.
The firm has 320 patents pending approval and aims to increase the number to 1,000 within three years in an attempt to avoid the frequent patent lawsuits seen in the smartphone industry, founder and chairman Lei Jun (雷軍) said yesterday.
The company, which generated 12.65 billion yuan in revenue last year, has no plan to launch initial public offering within 5 years, Lin said.