Josh Horwitz

SHANGHAI (Reuters) -China’s Xiaomi (OTC:) Corp on Tuesday reported a smaller-than-expected 8.2% rise in third-quarter revenue as smartphone sales growth stalled amid intensifying competition from rivals.

Close to 7% fell in shares on Wednesday at the open of the markets.

Smartphone sales make up the bulk of the company’s revenue. In the three months ending Sept. 30, the company reported that smartphone revenues increased 0.4%, to 47.8 million yuan ($7.49 trillion).

However, smartphone sales fell 5.8% compared with the same period last year to 43.9 Million units. As the root cause, the company cited the worldwide shortage of chips.

Xiang Zhang, president of Xiaomi said during an earnings conference that they are “working hard” for supplies to 4G handsets overseas.

He stated that while the shortage is expected to continue for the first half next year, he anticipates Xiaomi “maintaining very high growth” in 2022.

The July-September quarter saw overall sales rise to 78.06 trillion yuan, which was below the market estimate of 79.20 miliarde yuan by Refinitiv.

After the withdrawal of rival Huawei Technologies Co Ltd from sanctions, Xiaomi had managed to capture market share in China. However, it has lost ground to Oppo, Vivo and Honor, as well as Huawei spinoff brand Honor.

Honor surpassed Xiaomi to claim the No. According to Canalys, Honor topped Xiaomi for the No. 3 position in China’s smartphone market share during the July-September quarter.

Canalys reported that Xiaomi’s sales in China increased only 4% over the same period last year. The country’s overall smartphone sales fell by 5%.

Xiaomi is responding to this competition by aggressively pushing brick-and-mortar retailers. Xiaomi opened its first 10,000th Chinese store last month. The company also promised to double that figure in the coming two- to three year.

The company had previously announced in March that it would invest $10 billion in electric vehicle (EV), and it stated on Tuesday that mass production will be possible in the first half 2024.

Xiaomi makes money selling ads online and various types of hardware. The company’s internet services division saw 27% growth year over year. This is mainly due to the placement of ads on various apps.

Xiaomi made 5.18 billion Yuan profit after excluding one-time gains or losses. This is largely consistent with analysts’ expectations of 5.09 billion Yuan.

($1 = 6.3878 )