Xiaomi profit surges, but chip shortage hurts

Chinese phonemaker Xiaomi is looking like one of the winners from all the troubles over at Huawei.

Its bigger rival has been steadily retreating from global markets due to U.S. sanctions.

And that seems to be driving a surge in profits at Xiaomi.

In the fourth quarter they surged almost 37%.

That took adjusted profit close to 500 million dollars, beating forecasts.

Shipments in China jumped by more than a half, with the firm grabbing 15% of the market.

Xiaomi ramped up production towards the end of last year, anticipating a drop in sales at Huawei.

But a global chip shortage could spoil the party.

Strong demand for gadgets from consumers stuck at home has outstripped supply.

The drought initially hit carmakers, but shows signs of spreading to all kinds of hardware.

Xiaomi has called the crunch 'extreme'.

On Wednesday (March 24) the company's president said the shortage was increasing costs.

He said some of that might have to be passed on to consumers in the form of higher prices.

Earlier this month, Reuters reported that Qualcomm - a key supplier to handset makers - was struggling to keep up with orders.