Xiaomi (Minutes): Annual smartphone target adjusted down to 180 million units

Xiaomi Group (1810.HK) released its Q1 2025 financial report (as of March 2025) after the Hong Kong stock market closed on the evening of May 27, 2025, Beijing time. The key points are as follows:

Below is the summary of Xiaomi's Q1 2025 earnings call. For financial report interpretation, please refer to "Xiaomi: Holding tight to the 'national subsidy thigh', can YU7 sell explosively again?"

1.$XIAOMI-W(01810.HK) Review of core financial report information

2. Detailed content of Xiaomi's earnings call

2.1 Executive statement of core information

1. Long-term R&D planning:

(1) 2021-2025: Cumulative R&D investment exceeds 102 billion yuan.

(2) 2026-2030: New target for 200 billion yuan in R&D investment.

(3) Chip team: Restarted chip business in 2019, cumulative investment exceeds 13.5 billion yuan, team size exceeds 2,500 people (top three in China);

(4) R&D team size: As of March 31, 2025, R&D personnel reached 21,731 (a historical high).

2. Market and product strategy

(1) High-end strategy:

a) Global mobile phone ASP increased to 1,211 yuan; market share in China's high-end market reached 25%.

b) Flagship model Xiaomi 15 Ultra's first-month sales surged by over 90% year-on-year (compared to the previous generation).

(2) Channel expansion:

a) Added 1,000+ Xiaomi Homes in mainland China (total nearly 16,000), with 235 car stores.

b) Offline channel mobile phone market share increased to 12.1% (+3.2 percentage points).

3. Progress in smart car business

(1) New product launch: Luxury high-performance SUV Xiaomi YU7 unveiled, with a range of 835 kilometers, equipped with an 800V high-voltage platform and advanced intelligent driving system, officially launched in July (standard, Pro, Max versions).

(2) Capacity enhancement: Q1 delivery volume of 76,000 units, second-phase factory to be put into operation within the year, strengthening vertical integration capabilities.

4. AI and ecosystem layout: Open-source inference AI model "Xiaomi MiMo" (7 billion parameters), leading performance in math and code testing.

2.2 Q&A session

Q: What strategies will the company adopt to cope with the rapid growth of IoT business and competitor layouts? Are domestic and international market strategies different?

A: The current IoT industry is still in a high-growth stage, with capacity shortages remaining a core challenge (such as tight capacity during the air conditioning peak season). The company believes that competitors' attention helps the industry develop positively and insists on user value orientation, opposing the sale of the same product at different prices in different channels, which harms consumers. Strategically, it will continue to improve product consistency and optimize capacity, with basic strategies consistent domestically and internationally, but the competitive landscape of home appliance brands in overseas markets is different, mainly dominated by Japanese brands.

Q: How to deal with the potential price pressure and sales expectation management after the hot sales of EVs?

A: The core advantage of SU7 lies in its strong replicability of capacity, with current capacity still severely insufficient, so there is no need to worry about price pressure. In the future, product configuration ratios will be dynamically adjusted based on actual market demand, forming a reasonable model combination after sales normalization. Price strategy will be based on supply-demand relationships and user experience optimization, rather than short-term promotional drives.

Q: How do smart home appliance factories and EV factories contribute to efficiency and profitability improvement?

A: Smart factories (covering EVs, smartphones, home appliances) optimize costs through shared supply chains and core technologies, achieving cost optimization through scale production. Experience reuse and global layout have entered a mature stage, with significant product competitiveness supporting continuous efficiency and profitability improvement. Taking SU7 as an example, its competitiveness has been verified without relying on price cuts, with high-configuration models accounting for a higher proportion and peripheral income (such as 500 million yuan last quarter) further supporting profit margins.

Q: What adjustments are there to the 2024 smartphone shipment volume and price strategy?

A: The strategic focus shifts to optimizing product structure, reducing low-end models (such as in Japan and Hong Kong markets), focusing on mid-to-high-end markets. Overall sales increase this year (expected 170 million → 180 million units). With structural upgrades, potential markets such as Africa (current share 13%) aim to increase to 20%, still having room.

Q: What are the reasons for the increase in electric vehicle gross margin and future trends?

A: Gross margin has increased for consecutive quarters (15.4% → 23.2%). Reasons:

1. Product strength, such as models like SU7, popular single products can optimize costs;

2. Emphasis on efficiency at a certain sales volume for single products, channel efficiency may be 2-3 times that of traditional car companies with the same retail price;

3. Increased delivery volume, with 27,000 units delivered in Q2 last year, 40,000 units in Q3, 70,000 units in the most recent quarter, and 75,000 units delivered in Q1 this year, allowing fixed costs to be spread, helping improve efficiency and gross margin;

4. Car sales have not reduced prices so far, with some rights gradually in place, improving gross margin;

5. High-end products began delivery in Q1, and peripheral products brought about 500 million yuan in other income last quarter, the highest since disclosure, greatly helping gross margin.

Currently, new business still has about 500 million yuan in losses.

Q: What is the specific plan for the high-end strategy of smartphones in the next five years? What is the investment in AI and the direction of innovation in smartphone integration?

A: Strategic core: Continue the high-end path of the past five years (focusing on smartphones and EV categories, promoting uniformly under the Xiaomi brand).

Collective planning:

1. Price band breakthrough: Consolidate the advantage in the 4,000-6,000 yuan price range (China market share 17-18%), focus on the market above 6,000 yuan (currently only 5%), and extend to categories such as home appliances and tablets. (In Q1 2025, the market share in the 4,000-5,000 yuan price range in mainland China was 24.4%, ranking first)

2. Global replication: Systematically export the successful experience of the Chinese market overseas, achieving large-scale implementation of the high-end strategy.

Innovation direction:

1. Technology investment: R&D expenses in 2024 will increase to 30 billion yuan, with 25% focusing on AI; Capex will increase significantly year-on-year, with a focus on AI infrastructure.

2. Scene deepening: Relying on massive user data and diverse scenarios, optimize user experience through self-developed Mimo large model, promoting deep integration of AI and smartphone functions (such as imaging, interaction, etc.).

3. High-end collaboration: AI capabilities will serve as a key support for high-end, combining with ecosystem products such as home appliances and EVs to build differentiated technology barriers.

Q: What is the long-term plan for the self-developed XRING chip and its application prospects in non-phone/wearable devices? Is the 25% IoT gross margin level sustainable?

A:

1. Chip planning:

(1) Focus on flagship smartphone SoC development, temporarily not considering non-flagship series equipped with self-developed chips.

(2) Platform capability reuse: Flagship SoC technology accumulation (high computing power, low power consumption) lays the foundation for chip development in car machines and home appliances, and will extend to communication modules (3G/4G/5G integration) in the future.

2. Gross margin outlook: The current 20% gross margin target remains stable, AIoT business is still in the capability building period, with high growth in multiple categories such as home appliances and tablets (some categories exceed 100% year-on-year), forming profit support, with limited impact from competition on overall fluctuations.

Q: Will aggressive pricing strategies be adopted to cope with competition during promotional nodes such as 618?

A: Adhere to the "product-driven" strategy, with no plans for large-scale price adjustments. Core categories (such as home appliances) rely on capacity ramp-up and technology iteration to maintain premium, with ecosystem collaboration advantages (significant growth in TV/wearables) further offsetting single-category price pressure.

Q: Will memory supplier capacity adjustments affect smartphone costs and profit expectations?

A:

1. Cost trend: Q2 inventory cost decline as a turning point, EFS (storage class) cost slightly decreased in Q2-Q3, slowly rising from Q4 but with moderate amplitude, mainly structural adjustments, with demand not significantly driving price fluctuations.

2. Impact is controllable: Based on accurate predictions and enhanced supply chain bargaining power, cost fluctuations have limited impact on gross margin, with overall smartphone gross margin remaining stable.

Q: How do you view the potential price war in the electric vehicle market and the competitive positioning in industry consolidation?

A:

1. Short-term strategy: Prioritize the delivery of existing orders, strengthen user reputation (such as SU7 has verified product strength), with limited impact from short-term price competition.

2. Long-term capability: Relying on comprehensive capabilities such as supply chain management and factory construction (far exceeding industry average efficiency), build "product strength + system strength" barriers, clarifying that price war is not a core competitive means.

Q: How does the self-developed Xuanjie chip affect smartphone pricing and overall gross margin?

A:

1. Chip positioning: Self-developed chips focus on flagship models, with short-term financial goals not being a priority consideration, focusing on technology verification and product strength improvement. Long-term (5-10 years) goal is to achieve a reasonable cost model through scale, with limited impact on overall gross margin currently.

2. Collaborative cooperation: Maintain good communication with partners such as Qualcomm to ensure supply chain stability, with high-end model shipments increasing year by year to support profit resilience.

Q: What adjustments are there to the competitive landscape and growth strategy in overseas markets such as India and Africa?

A:

1. Indian market: Due to uncertainty in local policies and operating environment, proactively reduce risk exposure and strategically shrink scale.

2. African market: Abandon ultra-low-end products, focus on optimizing the structure of mid-to-high-end models, with market share starting from 12%-13% and aiming to increase to 20%, leveraging scale effects and regional differentiation strategies (refined operations in 8 global regions) to tap potential.

3. Regional highlights: Southeast Asia and Latin American markets have risen to second place, with mainland China channels remaining first, with global layout resisting local fluctuations.

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