Xiaomi: Growing on the Ground, Taking on New Challenges

On August 29, Xiaomi Group released the 2023 Q2 performance announcement. According to data, in the second quarter, Xiaomi Group’s total revenue reached RMB 67.4 billion, an increase of 13% from the previous quarter, and its adjusted net profit reached RMB 5.1 billion, a year-on-year increase of 147%. exceeded market expectations. As of the first half of 2023, Xiaomi's adjusted net profit was 8.4 billion yuan, which is close to the adjusted net profit level of last year.

Behind the unexpected performance growth is the embodiment of Xiaomi's efficient implementation of core business strategies and steady advancement of high-end strategies. In this quarter, Xiaomi's overall gross profit margin reached 21.0%, a record high. The gross profit margin of the three core businesses of smartphones, IoT consumer products, and the Internet business all increased simultaneously. In addition to business, Xiaomi is also actively improving and improving internal efficiency, continuing to reduce costs, increase efficiency and optimize inventory management, to consolidate the company's long-term healthy development. Not only that, in the second quarter, Xiaomi’s cash reserves were nearly 113.2 billion yuan, breaking through a record high. The abundant cash resources not only verified that Xiaomi has a healthy and efficient business model, but also laid a solid foundation for future development.
In the past three years, the high-end strategy has always been the top priority of Xiaomi's development. After a series of high-end explorations and precipitation, Xiaomi has formed a unique and stable competitive advantage in the high-end market. From a product perspective, the Xiaomi 12S Ultra, Xiaomi MIX Fold 2, Xiaomi 13, Xiaomi 13 Pro, Xiaomi 13 Ultra, and Xiaomi MIX Fold 3 models released successively in recent years have gained widespread love in the market with their powerful high-end flagship experience.

Faced with the continued weakening of global smartphone demand, Xiaomi has firmly grasped the initiative in the global smartphone market through its continuous evolution. According to Canalys data, in the second quarter, Xiaomi ranked among the top three smartphones in the world for 12 consecutive quarters, and its market share increased by 1.6 percentage points to 12.9%. 36.6 billion yuan, with a gross profit margin of 13.3%, a record high, an increase of 4.7 percentage points year-on-year. According to Canalys data, in the international market, Xiaomi’s smartphone shipments rank in the top three in 51 markets around the world, and in the top five in 61 markets. In Q2, Xiaomi’s smartphone shipments ranked second in both Europe and the Middle East, continuing to maintain a leading position in the international market.
Of course, Xiaomi not only continues to work hard on existing businesses but also embraces growth with full confidence and an open and inclusive attitude, creating a steady stream of growth momentum through continuous high-level R&D investment. In the second quarter, Xiaomi’s R&D expenditure reached RMB 4.6 billion, a year-on-year increase of 21.0%, maintaining year-on-year growth for nine consecutive quarters, and R&D personnel accounted for nearly 52%. Faced with a new generation of industrial and technological changes, in August, Xiaomi announced a new technological strategy upgrade, adhering to the selection of technological fields that have long-term value to human civilization, adhere to the concept of long-term continuous investment in science and technology, and further clarify the long-term future development direction.

In the first half of 2023, Xiaomi is actively seeking changes, and various businesses have shown growth momentum. The forward-looking direction of the strategy and the effectiveness of strategy execution have been fully certified. Looking forward to the future, with the in-depth advancement of the tide of AI innovation, Xiaomi will firmly adhere to the "technology-based" innovation and development path, which will surely enable it to maintain a strong competitive advantage. As Lei Jun, chairman and CEO of Xiaomi, said: only a breakthrough in cognition can bring about real growth. Xiaomi, which is in the great era, will surely go further and more steadily because of standing higher and starting earlier.