Xiaomi Corp (小米) is planning to buy autonomous driving technology start-up Deepmotion for about US$77.4 million, sealing a deal to help further its ambitions of getting into the fast-expanding field.
The company announced the acquisition after reporting better-than-expected results for the second quarter, when a recovery in key markets like India helped it overtake Apple Inc to become the world’s second-largest smartphone vendor by shipments.
Revenue surged 64 percent to 87.79 billion yuan (US$13.5 billion) last quarter, surpassing the 85.01 billion yuan average of estimates.
Photo: Reuters
Xiaomi CEO Lei Jun (雷軍) is spearheading a drive to take the firm beyond smartphones.
The 51-year-old is personally leading a project to make electric vehicles (EVs), and the company has pledged an initial investment of US$10 billion over the next decade in the business.
Lei has said that the company has deep enough pockets to fund such a project, which requires years of heavy investment in development and manufacturing before the first vehicle can even be sold.
Xiaomi’s shares yesterday slid as much as 4.7 percent, their biggest intraday fall in a month, after investors again punished Chinese tech stocks.
The stock was weighed down also by lingering concerns about Xiaomi’s growing outlay on EVs.
“Xiaomi’s results were very strong so the reaction appears to be just broader tech weakness,” Bloomberg Intelligence analyst Matthew Kanterman said. “Some concern remains about the degree of investment into Xiaomi’s smart vehicle business, but these are longer-term initiatives and not impacting near-term results.”
The acquisition of Deepmotion, which develops driver assistance software, is the latest in a series of moves Xiaomi is making to delve deeper into a crowded field.
A number of tech giants from Huawei Technologies Co (華為) to Baidu Inc (百度) have already spent years developing components and vehicle technologies.
Xiaomi president Wang Xiang (王翔) on Wednesday said that the purchase is intended to help the firm develop level 4 self-driving technology, which allows full autonomous driving.
“Through this acquisition, we hope to shorten the time to market for our product,” Wang told reporters after releasing results. “We want to speed up our autonomous driving R&D [research and development].”
While other details about Xiaomi’s EV efforts remain unclear, it has initiated a hiring spree of 500 engineers for the project, and has talked to multiple automakers and local authorities for potential partnerships.
The company has also looked at investing in Black Sesame Technologies, a start-up that develops artificial intelligence chips and systems for vehicles.
On Wednesday, Xiaomi reported that net income climbed more than 80 percent to 8.27 billion yuan last quarter, sezing the No. 2 position globally for the first time, in part after shipments in India almost doubled from a year earlier.
Lei this month set his sights on reaching the top spot within three years, taking advantage of the waning fortunes of local rival Huawei, whose capacity has been hobbled by US sanctions.
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