Chinese handset maker Xiaomi continues to face headwinds in its effort to diversify both its product line and geographic focus beyond its home market, which accounts for the bulk of sales.

The once fast-rising vendor sold 14.8 million smartphones in Q1 compared with 14.98 million a year ago, according to IHS Technology.

In February at Mobile World Congress the firm unveiled its flagship smartphones, the Mi5 and Mi5 Pro, in an attempt to turnaround its fortunes after missing its handset target last year.

The vendor missed its 2015 handset target of 80 million by 12 per cent and also reportedly failed to reach its $1 billion target for revenue from internet services.

While the company was the smartphone market leader in China last year, Huawei has taken the lead over the past two quarters, and now Xiaomi is in close competition with Lenovo for the number two spot in China. It ranked fifth globally with a 5.5 per cent share in Q1, up from 5 per cent a year ago, according to TrendForce.

The research firm said Xiaomi shipped about 16 million units in Q1 (compared to sales). It expects marginal shipment growth this year but said the Chinese vendor will see increasing profits coming from the sale of peripheral products related to smartphones.

The vendor also faces challenges as it moves to expand outside of China, where smartphone growth slowed to 3.3 per cent last year.

Xiaomi’s initial move into the Indian market last year was met with a patent complaint from Ericsson. It announced its first Indian-made device, RedMi 2 Prime, last August, and continued its push into the Indian market in December with its second locally made smartphone, the RedMi Note Prime.