Things aren’t looking great for China’s tech giant Xiaomi. The company today reported a major drop in fourth-quarter revenue, and they’re blaming it on a sharp decrease in smartphone shipments. The COVID-19 outbreak has caused some serious disruptions in mainland China, which isn’t doing Xiaomi any favors. With such a competitive market, this could be a big hit to the company’s future.

As reported by Reuters, Xiaomi’s sales in Q4 2022 came in at 66.05 billion yuan ($9.6 billion), which is down a whopping 22.8% from the previous year’s 85.58 billion yuan. While the numbers were slightly better than analysts predicted, they mark the fourth consecutive quarter of revenue drops for the company, and its steepest decline to date. To make matters worse, net income fell to just 1.46 billion yuan, a 67.3% decrease from the previous year’s 4.473 billion yuan.

With Xiaomi’s recent struggles, it’s natural to wonder: is the future looking dim for China’s tech giant? The company has certainly been facing some challenges as of late. For one, it lost its top spot in smartphone shipments in India during Q4 2022, which is a crucial market for the company. On top of that, Xiaomi’s India smartphone shipments in 2022 took a major hit, declining by a troubling 24% year-on-year.

And to make matters worse, the company dropped to third place in Q4, trailing behind Samsung and Chinese competitor Vivo. It’s a tough blow for Xiaomi, which has seen four consecutive quarters of declining revenue, with the steepest drop yet occurring in Q4 2022. Only time will tell if the company can turn things around, but as it stands, the future is looking difficult for the Chinese company.

Xiaomi group president Lu Weibing, speaking on a company earnings call, said that while the overall situation in China’s consumer electronics market may be improving, it will take time for the company to get a significant rebound in sales or profits. Year-on-year declines may continue in the first half of 2023 before a rebound occurs, he added.

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