Author: Huang Yu
Editor: Zhou Zhiyu
After Huawei's return, the mobile phone industry is undergoing tremendous changes. Xiaomi, which has been stirring up the new energy vehicle market with SU7, has now become &#34;Others&#34;.
Data released by IDC shows that in the first quarter of this year, Xiaomi's market share in the Chinese smartphone shipment market continued to drop to the &#34;Others&#34; category, with the top five rankings being Honor, Huawei, OPPO, Apple, and vivo. This is the second consecutive quarter that Xiaomi has been squeezed out of the top five in the domestic smartphone market.
The decline in Xiaomi's ranking is directly related to Huawei's strong comeback.
In the fourth quarter of last year, with the Mate 60 5G series, which was &#34;sold before release,&#34; Huawei's smartphone shipments increased by 36.2% year-on-year, returning to the top five and ranking fourth. In the first quarter of this year, Huawei's smartphone shipments saw even greater growth, increasing by 110% year-on-year, now tied with Honor as the top in the Chinese market.
This situation is very unfavorable for Xiaomi. Although Xiaomi maintained its fifth position throughout last year, Huawei is rapidly catching up.
According to Counterpoint statistics, in the full year of 2023, Huawei's smartphone sales volume increased by 52.1% year-on-year, although it still did not re-enter the top five, ranking sixth with a 12.1% market share. However, there has been a significant improvement in market share, with the gap between Huawei and Xiaomi, who ranks fifth, reduced from 5 percentage points to 2.2 percentage points.
Of course, driven by the Xiaomi 14 series, Xiaomi's sales have outperformed the overall market.
Counterpoint data shows that in the first quarter of 2024, China's smartphone sales volume increased by 1.5% year-on-year. Although Xiaomi ranks sixth with a market share of 14.6%, its sales still grew by 8.6%. Among the top five, except for Honor and Huawei in second and fourth place, sales of other manufacturers have declined year-on-year.
However, facing the aggressive Huawei, Xiaomi, which does not have a significant lead in market share, has become the first manufacturer to be replaced.
During Huawei's quiet years, the Chinese smartphone market maintained the pattern of Apple + &#34;OV Honor Xiaomi&#34;. Based on the current development trend, Huawei's smartphones are likely to regain the top spot in the Chinese market for the full year this year.
Next, if Xiaomi cannot demonstrate stronger market competitiveness and capture more market share, it may struggle to maintain its fifth position in the domestic market for the full year and continue to be among the &#34;Others&#34;.
As IDC China's research manager Guo Tianxiang pointed out, the intensifying competition among top manufacturers and the differentiation in strategies have made this year's market situation full of variables.
Although Xiaomi is currently making waves in the automotive battlefield, Lei Jun also knows well that the mobile phone business cannot afford any mishaps. At a recent Xiaomi investor conference, Lei Jun stated, &#34;While investing half of my energy in the automotive business, I have always been focusing on the mobile phone business, investing about 1/3 of my energy. Because the mobile phone business is the foundation of our survival.&#34;
According to the information released at the Xiaomi investor meeting, this year Xiaomi's smartphone shipment target is to increase by 15-20 million units, with a 50% year-on-year growth in shipments of smartphones priced over $600.
According to Canalys data, in 2023, Xiaomi's global smartphone shipments reached approximately 146 million units, ranking third with a market share of 13%, a decrease of 4% year-on-year, but still behind Apple and Samsung.
Xiaomi has ranked third in the global smartphone market for three consecutive years. In the future, Xiaomi has greater ambitions, aiming to become the global leader in smartphone shipments by 2028. In this process, the Chinese market is an important battlefield that cannot be ignored. Xiaomi must break through growth bottlenecks and gain a larger market share.
The high-end market is an important strategy for Xiaomi's current breakthrough.
When Huawei began to face challenges, Xiaomi started its own path towards the high-end market. At that time, Lei Jun made bold statements at Xiaomi's launch event, aiming to attack the domestic high-end market and &#34;overturn Huawei.&#34; Two years ago, Xiaomi officially stated its intention to &#34;benchmark Apple,&#34; and last year, Lei Jun emphasized the importance of the high-end market to Xiaomi, calling it a matter of life and death.
In late October last year, the release of the Xiaomi 14 series confirmed that Xiaomi had achieved some progress in the high-end market, but it is still far from enough.
Counterpoint data shows that Xiaomi's market share in the global high-end smartphone market (priced above $600) was about 2% last year, an increase of 1 percentage point year-on-year, while Apple, Samsung, and Huawei were 71%, 17%, and 5% respectively.
Although Xiaomi has gained favor from consumers in terms of its system and ecosystem, the high-end market has no room for error. Xiaomi still has a long way to go to establish a solid position in the high-end market.
Xiaomi's former ecosystem expert Xing Zitao told Wall Street News that it is not easy for Xiaomi to establish itself in the high-end smartphone market. The key lies in the deeply rooted brand positioning of high cost-performance ratio that Xiaomi has built in the past, making it difficult for the high-end brand image to settle. The best way for Xiaomi to succeed in the high-end market is to launch a new high-end brand.
In addition to brand image, consumers also have higher expectations for innovation in high-end smartphones.
A common consensus is that the popularity of foldable screen phones and the introduction of AI phones will continue to stimulate demand for high-end smartphones and bring new opportunities for domestic smartphone brands to impact the high-end market.
Especially in AI, it has become the next &#34;must-win battleground&#34; for all major smartphone manufacturers. In this race, all smartphone manufacturers are back on the same starting line, and a slight oversight could put them at a disadvantage.
Samsung has taken the lead in AI phones, and brands like OPPO, Honor, vivo, and Xiaomi have also started to focus on AI terminals, embedding large AI models into the operating system, but none have yet created a disruptive AI phone.
With Xiaomi's entry into the automotive industry, Lei Jun may rewrite the industry landscape of the Chinese automotive market. In the core business of smartphones, Lei Jun cannot afford to fall behind either. He must accelerate the layout of AI phones, maintain the existing market share, and advance towards a greater future

Is Xiaomi about to be squeezed out of the top five?