In the intensely competitive technology sector, Xiaomi Corp. has long been a focal point of industry attention. However, recent developments including the dismissal of Wang Teng for misconduct and a Xiaomi 13 phone explosion incident have created significant challenges for the company. These events, combined with concerning financial performance indicators, present interconnected issues that pose serious challenges to Xiaomi's future development.

**Wang Teng Dismissal Raises Internal Management Questions**

On the evening of September 8, Xiaomi Corp. issued an internal memo titled "Notice Regarding Disciplinary Action Against China Region Employee Wang Teng for Violations and Misconduct," announcing the dismissal of Wang Teng, General Manager of the China Region Marketing Department. The memo stated that Wang Teng leaked confidential company information and engaged in conflicts of interest, constituting serious violations of company regulations.

On the morning of September 9, Wang Teng posted on social media: "Regarding my departure, I've seen many rumors online, all of which are false information and simply outrageous. Let me clarify: I did not steal company secrets for sale, nor did I accept money from anyone. I acknowledge dereliction of duty and am deeply reflecting on this, but I have not engaged in any illegal behavior! Rumors stop with the wise, so please focus more on upcoming new products."

Wang Teng's career at Xiaomi has been notable since joining the company in 2016 at age 29. He progressed through various roles, including REDMI Product Director in March 2020, rotation to Xiaomi's Henan branch in November 2021, and return to Beijing headquarters in August 2023. In September 2023, he became REDMI Brand Spokesperson and Marketing Department General Manager. By February 2024, he was promoted to REDMI Brand General Manager, and by the end of December 2024, he was elevated to General Manager of Xiaomi's China Region Marketing Department while retaining his REDMI position.

As a prominent product manager with 1.802 million social media followers and daily readership exceeding 100,000, Wang Teng's sudden dismissal has created significant impact on Xiaomi's brand image and stock performance, sparking widespread discussion about the company's internal management and corporate culture.

**Xiaomi 13 Explosion Incident Impacts Product Quality Reputation**

Amid executive changes, Xiaomi faces product quality concerns following an explosion incident. A user in Jiangsu Province reported that their Xiaomi 13 phone exploded during normal use, injuring a child who was watching videos on the device. The incident, captured on video, showed the phone emitting fire and explosion sounds while in use.

The user confirmed the device was a Xiaomi 13 model that had not undergone repairs or modifications since purchase. Xiaomi's after-sales service indicated they would retrieve the phone remnants for research center analysis, though no official statement has been released by the company.

The Xiaomi 13 was officially launched on December 11, 2022, making this incident occur less than three years after its market introduction. The explosion has generated significant public concern, with many users of the same model expressing anxiety about product quality.

From a legal perspective, under China's Product Quality Law, manufacturers must assume responsibility for personal injury caused by product defects. If this incident is determined to be a product quality issue, Xiaomi faces not only compensation obligations but also substantial brand image damage.

**Smartphone Business Faces Revenue Decline and Margin Pressure**

Financial results show that in Q2 2025, Xiaomi achieved revenue of 115.96 billion yuan, representing 30.5% year-over-year growth and marking the third consecutive quarter exceeding 100 billion yuan, though growth decelerated from Q1's 35%. Operating profit reached 13.44 billion yuan, up 128.2% year-over-year, while adjusted net profit totaled 10.83 billion yuan, increasing 75.4%.

Smartphone and IoT businesses remain Xiaomi's primary revenue sources, contributing 84.2 billion yuan or 72.6% of total revenue. In Q2, smartphone business generated 45.5 billion yuan in revenue, declining 2% year-over-year, while IoT business achieved 38.7 billion yuan, growing 44.4% year-over-year but declining approximately 10% quarter-over-quarter.

Global smartphone shipments reached 42.4 million units in Q2, representing minimal 0.6% year-over-year growth, down from Q1's 3% growth rate. The revenue decline primarily resulted from decreased average selling prices (ASP), which fell to 1,073.2 yuan, down 2.7% year-over-year and 11.3% quarter-over-quarter, attributed to the April launch of the REDMI A5 series affecting overseas market ASP.

Intensified industry competition and pricing pressure reduced smartphone ASP from 1,103.5 yuan in Q2 2024 to 1,073.2 yuan in Q2 2025. Combined with rising costs for memory and battery materials, gross margin declined from 12.1% to 11.5% year-over-year, and decreased 0.9 percentage points quarter-over-quarter.

**Large Appliance Business Faces Intense Competition**

Within the IoT segment, smart large appliances revenue grew 66.2% year-over-year in Q2, reaching record highs. Air conditioner shipments exceeded 5.4 million units, growing over 60% year-over-year. Management announced targets for air conditioner shipments to exceed 10 million units annually and achieve top-three market position, with ambitions to become market leaders by 2030.

However, market data shows Xiaomi air conditioners still lag behind traditional appliance giants like Midea and Gree in both sales volume and revenue. The air conditioning industry faces particularly intense price competition, impacting Xiaomi's efforts to expand market share while maintaining profitability.

**Automotive Business Confronts Delivery and Profitability Challenges**

As smartphone and appliance markets face contraction pressures, Xiaomi has identified automotive business as a strategic growth direction, though this segment faces significant challenges. In Q2 2025, the intelligent electric vehicle and AI innovation business segment generated 21.3 billion yuan in revenue with 26.4% gross margin, with automotive contributing approximately 20.6 billion yuan or 18% of total revenue.

While the first SUV model, the YU7 series, achieved 240,000 pre-orders within 18 hours of launch, delivery timelines present significant constraints. Current orders for YU7 Max require 41-44 weeks for delivery, YU7 Pro requires 47-50 weeks, and standard YU7 requires 55-58 weeks, meaning customers face at least 10-month waiting periods.

From a profitability perspective, although automotive business operating losses narrowed to 300 million yuan in Q2 2025 from 500 million yuan in Q1, and management expects potential quarterly profitability in the second half, cumulative investment in new businesses exceeded 30 billion yuan from 2022 through H1 2025, representing substantial accumulated losses.

The increasingly competitive new energy vehicle market, with numerous manufacturers intensifying investments and launching new models, presents significant challenges for Xiaomi's automotive ambitions.

In the current accelerating technology landscape, while Xiaomi demonstrates management determination through organizational reforms, the company must strengthen product quality management and implement precise strategic execution to navigate industry cycles and achieve sustainable high-quality development.