Xiaomi Corp reported a 18.9 per cent drop in quarterly revenue on Wednesday as consumer demand for smartphones remained weak even as the economy recovered from the Covid-19 pandemic.

Sales in the first quarter of 2023 reached US$8.4 billion, down from $10.3 billion in the same quarter a year earlier, roughly in line with analyst estimates of $8.4 billion.

Net income rose to 3.23 billion over the period, an increase of 13.1 per cent from $404.6 million a year earlier.

After China lifted its stringent pandemic controls late last year, the country’s economy has recovered but consumers are spending cautiously. China’s smartphone sector saw no bounce back over the period at all. Total sales in China fell 11 per cent in the first quarter of 2023, research firm Canalys reported in April. Xiaomi’s sales over the period fell 20 per cent. India, once Xiaomi’s top market overseas, has also proved less lucrative for the smartphone maker. Total smartphone shipments fell 20 per cent across all brands in the first quarter, and rivals such as Samsung have eaten away at Xiaomi’s share of the shrinking market. The company has cut prices on several of its models in India and China in the hope of spurring demand.

Xiaomi is investing in the automotive sector in an attempt to diversify away from smartphones. The company plans to start mass production of its first car in the first half of 2024.

• Reporting by Josh Horwitz; Editing by Louise Heavens and Christina Fincher, of Reuters.