Xiaomi Group will release its Q2 2025 earnings report on August 19, 2025. Q2 marks a critical period for Xiaomi’s automotive production ramp-up, with its Beijing Phase II factory completed and set to commence operations. Meanwhile, Xiaomi surpassed Apple to rank second in Europe’s smartphone market for the first time, while its IoT business maintained rapid growth supported by government subsidies. The average selling price (ASP) of smartphones is expected to remain high.
Market Forecast
Bloomberg expects Xiaomi’s Q2 2025 revenue to reach RMB115.28 billion, up 29.7% YoY; gross margin ratio at 22.36%, up 8.07pp YoY; adjusted net profit at RMB10.2 billion, up 52.4% YoY; adjusted EPS at RMB0.39, up 55.29% YoY; R&D expenses at RMB7.217 billion, up 31.29% YoY.
Q1 Review
In Q1 2025, Xiaomi’s revenue rose 47.39% YoY to RMB111.293 billion, exceeding RMB100 billion for two consecutive quarters. Adjusted net profit surged 161.22% YoY to RMB10.924 billion. Gross margin climbed to a record 22.8%.
Smartphones: Domestic shipments hit 13.3 million units (+40% YoY), reclaiming the top spot with 19% market share. Global shipments reached 41.8 million units (+3% YoY), with ASP hitting a historic high of RMB1,211.
IoT & Lifestyle Products: Revenue rose 58.7% YoY to RMB32.3 billion.
Smart Electric Vehicles: SU7 series deliveries totaled 75,869 units, generating RMB18.6 billion in revenue. Gross margin improved to 22.5%, with losses narrowing to ~RMB500 million.
Internet Services: Revenue grew 12.8% YoY to RMB9.1 billion, with gross margin at 76.9%.
Xiaomi’s Q1 performance exceeded expectations, driven by its premiumization strategy and breakthrough progress in automotive. Smartphones regained domestic leadership, IoT grew explosively due to subsidies, and automotive gross margin neared breakeven. These milestones signify Xiaomi’s substantial transition from a "value-for-money king" to a "premium tech giant."
Q2 Outlook
1. Smartphone Business Hits New Highs
Xiaomi’s global smartphone shipments are expected to reach 42.7 million units in Q2 (+5% YoY), with domestic shipments at ~10.4 million units. In Europe, Xiaomi captured 23% market share (+11% YoY), overtaking Apple to become #2 for the first time. This reflects the success of its premiumization strategy—the Xiaomi 15 Ultra’s starting price even exceeded Apple’s highest-end iPhone 16 Pro Max. Despite sluggish entry-level demand amid Samsung’s Galaxy S25 series boom and iPhone 16e launch, Xiaomi’s mid-to-high-end portfolio limited its shipment decline to 2%, outperforming Apple (-4%) and Samsung (-10%).
Xiaomi’s European breakthrough marks a new phase in its globalization. By deepening its imaging partnership with Leica and strengthening carrier partnerships in Germany, France, and Spain, Xiaomi has secured a foothold in Europe’s premium segment. President Lu Weibing emphasized, "Premiumization is Xiaomi’s core next step in Europe," aiming to boost brand value and gross margin globally.
2. Auto Deliveries Accelerate
Xiaomi is ramping up capacity via two key initiatives:
Beijing Phase II factory (annual capacity: 150,000 units) starts production soon, targeting monthly output of 8,000 units initially, rising to 20,000 by Q4. Total Beijing capacity will then reach 350,000 units/year.
Optimizing efficiency at existing plants via double-shift production, AI tech (e.g., 76-second production time/vehicle, 100% automation in key processes), and AI vision inspection (cutting quality check time by 40% to 28 minutes, equipment utilization: 92%).
In June 2025, Xiaomi Auto delivered over 25,000 vehicles (primarily SU7), leading its segment. With Phase II production, the YU7 will begin deliveries in July, targeting monthly capacity of 30,000+ units and 50,000 by year-end. Xiaomi secured land for its Beijing Phase III factory and is preparing its Wuhan plant to support future models and higher targets: 350,000 deliveries in 2025, and 450,000 units/year capacity in Beijing by 2026.
3. IoT Subsidy Tailwinds Continue
Per Canalys, Xiaomi’s IoT shipments in Europe grew 40% YoY, led by major appliances. To mitigate subsidy phase-out risks in H2, Xiaomi is building a smart appliance factory in Wuhan Optics Valley (scheduled for late-2025 operation), enabling flexible production and cost optimization. Its AIoT platform connected devices surpassed 944 million (+20.1% YoY) in Q1, strengthening ecosystem stickiness for future service revenue growth.
4. R&D Expansion Builds Tech Barriers
Q2 R&D spending is projected to remain high, supporting a full-year target of RMB30 billion. Q1 R&D investment hit RMB6.7 billion (+30.1% YoY), with R&D headcount reaching 21,731 (nearly 50% of total staff). Its in-house developed 3nm SoC "Xuanjie O1" entered mass production, powering flagship devices (Xiaomi 15S Pro, Xiaomi Pad 7 Ultra). With performance rivaling Qualcomm’s Snapdragon 8 Ultimate, the chip features:
2nd-gen 3nm process
10-core CPU (4 clusters: 2× X925 prime cores @3.9GHz; 4× A725 performance cores @3.4GHz; 2× A725 low-frequency cores @1.9GHz; 2× A520 ultra-efficiency cores @1.8GHz)
This breakthrough enhances competitiveness in premium smartphones and underpins Xiaomi’s "Human x Car x Home Smart Ecosystem."
Analyst Views
Goldman Sachs raised its 2025-2027 net profit forecast, citing AIoT and auto as sustained growth engines. Using SOTP valuation (core business: 15.0x ex-cash 12-month forward earnings; EV segment: 5.5x 12-month forward P/S), it maintains a "Neutral" rating with a HK$60 target price.
CLSA noted headwinds from weak smartphone margins and slower EV capacity ramp, but affirmed strong YU7 pre-orders (total auto orders exceed 250,000 units). Rising ASP and scale effects should improve EV margins, with breakeven expected in Q3 2025.
Conclusion
Xiaomi’s Q2 report is poised to showcase "multiple-engine growth": smartphones achieving a historic European breakthrough, IoT sustaining high growth on subsidies, auto deliveries scaling with new capacity, and internet services rising steadily.
Long-term, Xiaomi’s ecosystem strategy is gaining traction. Mass production of the Xuanjie O1 chip, the SU7 Ultra’s robust margins, and strong YU7 pre-orders reflect progress in tech innovation and ecosystem synergy. With Beijing Phase II and Wuhan plants alleviating capacity constraints, Xiaomi is positioned for steadier growth in H2 2025.