Xiaomi Overtakes Samsung in Smartphone Market

For years, Huawei was considered the most likely candidate to one day topple smartphone king Samsung from the supreme throne. Now comes Xiaomi, another group from China has caught up with the ailing industry leader. Is this a visible turning point?

This is an impressive hike. In just one year, Xiaomi has doubled smartphone sales – and in June reached the top position in the smartphone market for the first time. The company managed to skillfully exploit the weaknesses of its competitors Samsung and Huawei. At Samsung, however, panic ensued.

The numbers speak for themselves: 17.1 percent of smartphones sold worldwide came from Xiaomi in June, according to “Counterpoint Research” analysts; the group itself was able to sell 26 percent more devices than the previous month. Samsung slumped from its usual 20 to just 15.7 percent market share, Apple’s 14.3 percent well above the summer months of recent years. This is the first time in its ten year history that Xiaomi has secured top sales.

Xiaomi is on the rise

This is a surprise for Samsung. So far, only two companies have managed to topple Korea from the top for a while. Apple largely dominates the Christmas quarter with its iPhones, which are usually served in September. Otherwise, only Huawei has managed to overtake Samsung at times.

There are two main reasons why Xiaomi is now able to reach the top: Huawei has shrunk into its own shadow as a result of the sanctions imposed by the US government, which were still decided under then President Donald Trump and maintained under the current administration. At the same time, Samsung is also struggling with a shortage of spare parts. However, this is the result of actions actually meant to reduce the damage caused by the pandemic: Last year, the company moved part of its production to Vietnam, now the Corona outbreak there is disrupting the production of Samsung’s successful mid-range A.

The deep fall of Huawei

Xiaomi has had an impressive climb. After a long time of scoring points with very affordable devices, the manufacturer now offers devices for almost every everyday use with a portfolio of 58 current models, from very cheap to premium. At the same time, it cleverly exploits the gaps left by its rival Huawei. Although Huawei continues to deliver the latest devices, it is barely able to deliver them to the market. Due to sanctions, spare parts selection is very limited and production volume is low. This is evident in sales: While Xiaomi was able to increase its sales in the first quarter from 32 to 48 million units sold in a year and a half, Huawei slumped from 49 million sales to just 15 million in the same period. The former giant’s market share is only four percent.

“Since Huawei’s decline, Xiaomi has pushed its constant and aggressive advances into the gaps it left behind,” said Counterpoint market researcher Tarun Pathak, explaining the gains. “Manufacturers have been expanding into former Huawei markets such as China, Europe, Middle East and Africa. In June, sales increased as the situation in China, Europe and India improved while Samsung struggled with constraints.”

Samsung is struggling

Analysts have not seen Samsung in serious trouble, they believe that the company should regain its old strength by normalizing its production. This is also supported by the numbers if you look at the whole quarter, not the month. Both Counterpoint and competitor Canalys saw Samsung on top for the entire second quarter (19 percent market share with Canalys, 18 percent with Counterpoint). Xiaomi only comes close to the forefront by just two percent and is clearly ahead of Apple. In year-to-year comparisons, that’s a big jump: Last year, Samsung’s market share in the second quarter was 20 percent twice as high as Xiaomi’s.

Therefore Samsung is also addressing the issue internally, reports Korean news site “The Elec”. As a result, the Group has initiated an internal investigation into possible mismanagement. According to the site, this always happens when a division of the Giga group does not live up to expectations.

Weak Point

While the decline in sales of mid-range A-series devices had the biggest effect on Samsung’s market share, another series is likely to worry the company more: The premium models of the Galaxy S series have sold significantly weaker in recent years. than usual. According to a recent report, Samsung was only able to sell 13.5 million of its top models in the first six months. That’s 20 percent less than the Galaxy S20 from last year and even 47 percent less than the Galaxy S10 from 2019.

The disadvantages also tend to be detrimental because the device has a much higher profit margin compared to the middle class. In addition, the premium model of the Galaxy Note series that will follow in the summer has been discontinued this year. The foldable smartphone being offered instead, which Samsung sees as a new business in the future, has yet to achieve sales volumes that can offset the failure due to high prices. New models are expected this week, and their pricing will likely play a decisive role in the division’s future success. Xiaomi now also offers such a device.

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