The news: Xiaomi became the second-largest global smartphone vendor by shipments in Q2 2021, according to a new report from Canalys, knocking Apple out of the No. 2 spot. The Chinese company captured 17% of global market share, just behind Samsung (19%) but ahead of Apple (14%).

Xiaomi was propelled to the second spot by a staggering 83% YoY growth thanks to strong sales in Western Europe, Africa, and Latin America. Xiaomi’s smartphones are geared toward entry- and mid-tier segments with prices hovering around 40% and 75% cheaper than Samsung and Apple devices respectively, per Canalys research manager Ben Stanton.

More on this: Xiaomi’s surge in sales, similar to Huawei’s ascent before it was banned, is indicative of a market trend to Chinese smartphone vendors selling affordable devices in emerging markets.

• Canalys found that Oppo and Vivo lagged behind Apple in fourth and fifth place, respectively. Both of these Chinese smartphone brands had growth rates above 27% YoY, compared with Samsung’s 15% YoY and Apple’s meager 1% YoY growth.
• “Xiaomi is growing its overseas business rapidly,” Stanton told Bloomberg, noting that its shipments increased 300% YoY in Latin America and 50% YoY in Western Europe.

The takeaway: With Apple and Samsung’s growth showing signs of stagnation, we can expect Chinese manufacturers like Xiaomi, Oppo, and Vivo to obtain more global market share. This will especially be the case in emerging markets, where there’s less demand for 5G and consumers are more price-sensitive.

Smartphone innovation has hit a plateau. Handset vendors are iterating on designs and materials as well as improved camera and display technologies but lack clear direction for growth. Samsung, for example, is hoping new form factors like foldables will generate interest in yet another premium smartphone category, despite consumer ambivalence. These features may also not matter as much in emerging markets.

The Canalys report identified growth of high-end device sales as a major priority this year for Chinese smartphone-makers. If Chinese firms can offer phones with feature parity to Samsung and Apple flagships, but at much lower prices, they stand to potentially further disrupt the global smartphone market and gain more market share.