Goldman Sachs and Deutsche Bank comment on Xiaomi's press conference: The Xuanjie chip opens the company's "decade of hard technology," and the YU7 may become a blockbuster SUV

Overnight, Xiaomi held its 15th anniversary strategic product launch conference, unveiling the Xuanjie O1 chip, YU7, as well as several heavyweight new products such as Xiaomi 15S Pro and Xiaomi Pad 7 Ultra. Goldman Sachs and Deutsche Bank expressed optimism about Xiaomi in their subsequent reports.

According to news from the Chasing Wind Trading Desk, Goldman Sachs commented in its latest report that the Xuanjie chip marks a key step in Xiaomi's technological independence. Through the deep integration of the Xuanjie chip and the Surge system, Xiaomi is expected to enhance product competitiveness and build a user experience advantage. The configuration of the YU7 leads several key indicators among its class of SUV models and is expected to become a best-selling model in China's high-end new energy SUV market.

Deutsche Bank believes that the chip release marks an important milestone for Xiaomi in becoming a global technology leader. The deep integration of software and hardware will help establish stronger brand recognition and a technological moat in global tech competition. The YU7 directly targets the core competitive segment of the high-end electric vehicle market, with an expected annual delivery volume of 100,000 units by 2025, making Xiaomi's automotive business a significant revenue and profit growth point in 2025.

As a result, Deutsche Bank set a target price of HKD 74 for Xiaomi, indicating a 20% upside potential from the current HKD 53. Goldman Sachs maintained a target price of HKD 62, with a potential upside of 16.5%. Additionally, Goldman Sachs pointed out that several catalysts could drive the stock price upward in the coming months, including the Q1 performance report on May 27, the Investor Day on June 3, the June 18 shopping festival (which typically contributes two-thirds of Q2 smartphone and AIoT revenue), and the official launch of the YU7.

"Self-developed chips" demonstrate Xiaomi's accelerating technological ambitions, with software and hardware integration benchmarking Apple's ecosystem strategy

Xiaomi officially launched the Xuanjie O1 chip, which is the company's first self-developed 3-nanometer flagship SoC chip, equipped in the Xiaomi 15S Pro smartphone and Xiaomi Pad 7 Ultra tablet. Also launched was the Xuanjie T1, Xiaomi's first self-developed 4G baseband processor, used in the eSIM version of the Xiaomi Watch S4.

Xiaomi's management stated that it plans to invest CNY 6 billion in self-developed chip development throughout 2025 and has committed to investing CNY 200 billion in R&D between 2026 and 2030, with each generation of SoC requiring at least USD 1 billion in R&D investment.

Goldman Sachs stated in its report:

Xiaomi has become the fourth company globally to possess a self-developed 3nm process SoC, marking a new starting point for Xiaomi to break through core technologies in the next decade, including chips, AI, and operating systems.

Although short-term sales contributions are limited, in the long run, this will significantly enhance the company's technological moat. Xiaomi plans to continue deep cooperation with chip partners while maintaining its investment in self-developed chips, a strategy similar to Samsung's chip strategy. Through the deep integration of Xuanjie and Surge, Xiaomi is expected to enhance product competitiveness and build a user experience advantage.

Deutsche Bank stated: This marks an important milestone for Xiaomi's transformation from a smartphone manufacturer to a comprehensive technology ecosystem enterprise. The software and hardware integration strategy is expected to enhance product competitiveness and profitability, supporting the potential for stock price increases

These products mark a significant breakthrough for Xiaomi in the hardcore technology field. The company's deep layout in chips, AI, and operating systems will become a key driver of long-term growth and will help Xiaomi establish stronger brand recognition and a technological moat in the global tech competition.

Xiaomi achieves deep integration of hardware and software through the combination of the Xuanjie chip and the Pengpai system, aiming to provide a smoother product performance experience. The company clearly stated that this strategy is learned from Apple, which has surpassed competitors based on the Android system in performance through the combination of its self-developed A18 chip and iOS operating system.

YU7 Electric SUV: Directly Targeting the Core Competitive Segment of High-End Electric Vehicles

With the launch of the YU7 electric vehicle, both Deutsche Bank and Goldman Sachs stated that the YU7 electric vehicle surpasses its peers in size, performance, and range, and is expected to become a best-selling model in China's high-end new energy SUV market.

Xiaomi also showcased its second electric vehicle model, the YU7, positioned as a high-performance pure electric SUV, set to be officially released in July. Compared to similar models, the YU7 has significant advantages in size, performance, and range:

1. Size Advantage: The YU7 measures 4999/1996/1600 mm (30 mm wider and 150 mm taller than the SU7), with a wheelbase of 3000 mm (same as the SU7), making it the longest wheelbase among similar SUV models. Notably, the YU7 offers 77 mm of rear headroom (compared to 72/65 mm for Model Y/Porsche Cayenne) and 73 mm of rear legroom (compared to 63/69 mm for Model Y/Porsche Cayenne).

2. Performance/Powertrain: The YU7/YU7 Pro has a top speed of 240 km/h (faster than the SU7/SU7 Pro), while the YU7 Max reaches a top speed of 253 km/h (close to the SU7 Max's 265 km/h), exceeding most similar SUV models. The YU7 Pro is equipped with dual V6s Plus motors, upgraded from the single motor of the SU7 Pro, with maximum power outputs of 235/365/508 kW for the YU7/YU7 Pro/YU7 Max, higher than the corresponding SU7 versions and most similar models.

3. Range: The YU7 is equipped with a 96.3 kWh lithium iron phosphate battery, achieving a CLTC range of 835 km, the longest range among all mid-to-large pure electric SUVs on the market. The YU7 Pro and Max versions support CLTC ranges of 770 km and 760 km, respectively.

4. The YU7 features advanced end-to-end autonomous driving capabilities, utilizing hardware configurations such as NVIDIA Thor-U autonomous driving SoC, Hesai LiDAR, 4D millimeter-wave radar, and high-definition cameras. Additionally, it has a unique "HyperVision" panoramic head-up display system that spans the entire dashboard.

In response, Deutsche Bank stated:

The Xiaomi YU7 large pure electric SUV will directly compete with mainstream high-end electric SUVs such as Tesla Model Y, ZEEKR 7x, IM Motors R7, Avita 07, IM Motors LS6, Leapmotor L60, Aito M5, Tengshi N7, and XPeng G7

It is expected that Xiaomi will start deliveries of the YU7 SUV simultaneously with its official launch in July. The annual delivery volume of the YU7 SUV is expected to reach 100,000 units in 2025, while the annual delivery volume of the SU7 sedan is expected to be 280,000 units. Xiaomi's automotive business is likely to become an important source of revenue and profit growth in 2025.

Goldman Sachs is also optimistic about the demand prospects for the YU7, believing it is likely to become a best-selling model in the high-end new energy vehicle SUV market in China, competing with rivals such as the Tesla Model Y (with an average monthly sales of 35,000 units over the past six months). The launch of the YU7 may further consolidate Xiaomi's position in the new energy vehicle sector and enhance the attractiveness of its "human × vehicle × home" ecosystem strategy