Xiaomi to Proceed with $77.4M Acquisition of Autonomous Driving Startup Deepmotion, Affirms Chip Shortage is “Manageable”

xiaomi
Lei Jun, Co-founder and CEO of Xiaomi, in 2019. The Beijing-based firm overtook Apple in July to become the world’s second-largest smartphone seller. (Image: China Daily)

Xiaomi Inc. delivered its financial report for the second quarter of 2021 on Wednesday evening, also outlining plans to continue its advance into the competitive field of autonomous vehicles and expressing confidence in its ability to overcome challenges posed by the ongoing global chip shortage.

Total revenues during the period for the leading Chinese electronics firm reached 87.8 billion yuan ($13.5 billion), representing a year-on-year increase of 64.0%. Profits totaled 8.3 billion yuan for a year-on-year increase of 83.9%.

In early July, news emerged that Xiaomi would acquire Beijing-based autonomous driving technology company Deepmotion as part of its strategy to expand into the smart electric vehicle (EV) industry. At a Wednesday night earnings conference, Xiaomi confirmed that the merger would proceed for a total of $77.4 million.

“We are determined to develop our smart EV business,” Xiaomi Vice President and CFO Lin Shiwei said Wednesday, adding that they “are now at the stage of building the business team, and current progress is faster than expected.”

In the second half of the year, the company also plans to continue expanding its domestic and overseas smartphone business, despite ongoing supply chain complications. As of the end of the second quarter, Xiaomi’s physical retail stores across mainland China numbered more than 7,000, and the firm carried out operations in more than 100 foreign markets.

When asked about the challenge posed by the persistent global chip shortage, Lin acknowledged that while the wider industry has been adversely affected, Xiaomi is confident that the crisis is manageable. “Now we have 100 different markets where demand is very strong, … so our challenge is to manage this kind of dynamic difference,” Lin said.

Xiaomi also announced its plans on Wednesday to increase R&D investment to 13 billion yuan. Using these funds, the firm hopes to develop innovative new smartphone features to solidify its success in the market, such as an under-screen camera for its latest Mix 4 model.

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Founded 11 years ago in the tech hub of Beijing’s Haidian District, Xiaomi has grown to become a leading international manufacturer of electronic devices, including an expanding range of smart home appliances. In July, the company overtook Apple to become the world’s second-largest smartphone seller behind Samsung, according to a report by market analysis firm Canalys.

Three years after completing an IPO on the Hong Kong Stock Exchange in 2018, Xiaomi currently holds a market capitalization of $78.6 billion.