Shares in Xiaomi Corp (HK:1810) fell to a seven-month low on Wednesday after the Chinese electronics giant warned of rising smartphone and chip prices and mixed financial results for the third quarter.
Xiaomi shares fell 4.7% to HK$38.88, their lowest level since early April. The stock was the worst performer and had the most significant impact on the Hang Seng Index, which declined 0.6% amid broader losses in technology stocks.
The electronics giant's revenue rose 2.3% in the quarter ending in September to 113.1 billion yuan ($16 billion), but fell short of the Reuters/LSEG estimate of 116.5 billion yuan.
However, Xiaomi's profits in the third quarter rose by 80.9% to 11.3 billion yuan, exceeding estimates of 10.3 billion yuan.
Smartphone and device sales remained strong in the quarter, and Xiaomi's electric vehicle business recorded its first-ever profitable quarter. The company posted strong car sales during the quarter, even outselling Tesla (NASDAQ:TSLA) in China in October.
But the main point of concern was a warning from the electronics giant that the prices of its smartphones are likely to rise further in the coming months, due to an unprecedented surge in global memory chip prices, given their use in artificial intelligence infrastructure.
Xiaomi President Lu Weibing expressed concern about chip prices on Tuesday's post-earnings call, and warned that increases in smartphone prices for customers may not fully offset the rise in chip prices.
Xiaomi is the world's third-largest smartphone manufacturer by sales, after Apple (NASDAQ:AAPL) and Samsung Electronics Co Ltd (KS:005930). While the company has attempted to diversify into electronics and electric vehicles, the majority of its revenue still comes from smartphone sales.
