·       With an expanding offline footprint both within and outside China, the company’s AIoT business experienced strong growth, with multiple categories achieving increases in both volume and revenue.

·       Launched in June, Xiaomi’s YU7 EV series extended the strong performance of SU7, with locked-in orders exceeding expectations. EV deliveries and production capacity continued to climb.

·       Xiaomi unveiled its first self-developed 3nm flagship chipset, XRING O1, underscoring its long-term commitment to in-house innovation and its ambitions in the premium segment.

Xiaomi’s revenue in Q2 2025 increased 30.5% YoY, according to its latest earnings report. The company’s core smartphone business accounted for less than half of its overall revenue during the quarter, highlighting the success of its diversification across products and sectors. Xiaomi’s automotive and other consumer electronics segments saw triple-digit and double-digit growth, respectively. Such growth levels in non-smartphone segments are rarely seen among mature smartphone brands.

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Smartphone shipments outlook and premiumization

·       Xiaomi: Q2 smartphone revenue slipped 2% YoY, as shipment growth was offset by a lower ASP. Due to a higher-than-expected rise in memory and storage prices, as well as constraints in battery materials, smartphone gross margins contracted sequentially. For the full-year outlook, the company has revised its shipment target to around 175 million units, aiming for 5%-6% YoY growth, still “a lot higher” than the overall industry.

·       Analyst: The successful launch of entry-level Redmi A5 series, combined with promotional discounts aimed at reducing inventory, led to a 2.7% YoY decline in the ASP in Q2 and a 2.1% contraction in Xiaomi’s smartphone revenue. At the same time, despite the slowdown in global smartphone market growth, the high-end segment maintained its trajectory, thanks to Xiaomi advancing its premiumization strategy on all fronts. In Q2, Xiaomi’s growth was also constrained by the release of fewer new models compared to competitors, and by the waning marginal impact of national subsidies in China. Looking ahead, we expect the new launches in Q3 – Note 15 series and flagship Mi 16 series – to reinvigorate its momentum.

AIoT strong performance and retail expansion abroad

·       Xiaomi: AIoT revenue hit a record CNY 38.7 billion in Q2, up 44.7% YoY, boosted by offline retail expansion. Multiple product categories achieved YoY growth, including large smart appliances, tablets, wearables and TWS. Strategically, Xiaomi aims to open 1,000 direct stores annually to improve controllable channels and enhance efficiency.

·       Analyst: Xiaomi’s “Smartphone × EV × AIoT” strategy centers on hardware interconnectivity and synergistic user experiences. Smartphones and vehicles function as control hubs, providing traffic entry points and operational interfaces for AIoT devices and enabling cross-scenario connectivity. This closed-loop ecosystem strengthens user stickiness and drives AIoT hardware sales, further expanding the user base and enabling the company to deepen its IoT product portfolio.

Smart EVs outperforming pre-orders and deliveries

·       Xiaomi: EV revenue alone surpassed CNY 20 billion for the first time in Q2, driven by an increase in both deliveries and ASP. Vehicle deliveries surged 197.7% YoY on successful capacity ramp-up, while the YU7 series generated over 240,000 orders within 18 hours of launch. Xiaomi targets single-quarter or single-month profitability in H2 2025, but cumulative profit will take longer given upfront investments.

·       Analyst: With the gradual ramp-up of YU7 deliveries, positioned as a “high-performance luxury SUV”, the EV segment’s ASP is expected to continue rising. Robust demand for the YU7 series, coupled with sustained momentum from the SU7 Ultra, has contributed to strong EV business growth. Additionally, leveraging Xiaomi’s strong global brand recognition, its planned entry into the European EV market in 2027 will unlock new market opportunities and serve as a key driver of its global brand premiumization and the “Human x Car x Home” smart ecosystem.

R&D investment in AI, chips and other new technologies

·       Xiaomi: Xiaomi expects R&D spending to reach CNY 30 billion in 2025, with about 25% invested in AI. Xiaomi officially launched its first self-developed 3nm flagship processor, XRING O1, which has been successfully integrated into three terminal products for market launch.

·       Analyst: Xiaomi’s sustained large-scale technology investments are progressively translating into tangible product competitiveness, underpinning the company’s breakthroughs across strategic innovation fronts including EVs, semiconductors and AI. These advances not only diversify Xiaomi’s growth engines but also reinforce its positioning in high-value segments, strengthening long-term resilience and market differentiation.