Meitu Hands Over Smartphone Production to Xiaomi
Due to the damage suffered from the production of smartphones, Xiaomi will now handle the production and development processes of Meitu business.
In the past two years, competition for Chinese smartphone manufacturers has become increasingly stiffer. However, many traditional smartphone manufacturers have announced the withdrawal from the smartphone sector.
However, this does not mean that market-drawn technologies will not be used in future products. A few days ago, Meitu published its 2018 annual earnings report. According to the financial report, in 2018, the company had an income of 2.78 billion yuan ($0.42 billion), down 37.8 percent year on year. The adjusted net loss was recorded as 87.91 billion yuan ($13.09 billion). It was due to a severe decline in the company’s smartphone industry.
In addition, the latest financial report shows that in 2018, smart hardware revenue decreased by 50.7 percent compared to the previous year to 1.81 billion yuan ($0.27 billion). In this context, Meitu announced at a performance meeting that smartphone productions would be stopped entirely before mid-year.
It’s now in Xiaomi hands
The company only launched a mobile throughout 2018, the Meitu T9, which added to the three launched in 2017. In the words of the company, the intelligent hardware division recorded a brutal loss of 62 million yuan (8.7 million euros) with a margin of -3.4%.
They point out that “China’s smart mobile market [its main market] was challenging in 2018,” as shipments dropped 15.5% in 2018 and expected it to get worse. Thus, the company has restructured its business, so that it will start betting more on advertising and will leave the mobiles in the hands of Xiaomi.
It was announced that Xiaomi would be responsible for production, promotion, research, and development for the next 30 years, and Meitu would only be responsible for sales.
Meitu will continue operating independently developing “technologies and image algorithms.” It is an intelligent bet, since Xiaomi has more scope and possibility of scale than Meitu alone, at least in this sector. They expect the mobile division to be reduced to zero by mid-2019.
In early November last year, Meitu announced a strategic partnership with Xiaomi. Meitu will license its smartphone’s brand image, image technology, and second level domain name to Xiaomi on a global pen scale, and Xiaomi will only use the relevant technologies and patents of this brand.
After using Meitu core imaging technology on Xiaomi devices, it is thought that photo quality will increase. However, Xiaomi and Meitu have not yet announced that their future products will be marketed as Meitu phones or that Xiaomi phones will directly use the company’s core imaging technology.