On August 19, Xiaomi-W (1810.HK) announced its Q2 2025 financial results, achieving total revenue of 115.956 billion yuan, up 30.5% year-on-year, and adjusted net profit of 10.831 billion yuan, up 75.4% year-on-year. Despite overall pressure on the global smartphone market in the second quarter, Xiaomi's smartphone business continued to achieve positive breakthroughs both domestically and internationally.
Notably, in the second quarter, Xiaomi's smartphone shipments grew rapidly in multiple overseas regions: it rose to first place in Southeast Asia with a market share of 18.9%; it returned to second place in Europe with a market share of 23.4%, surpassing Apple for the first time.
At the earnings conference that evening, Xiaomi Group Partner and President Lu Weibing stated that Xiaomi's short-term goal is to enter the "200 million club" for sales volume, which would create a "three-way competition" situation where Apple, Samsung, and Xiaomi would all have annual smartphone sales exceeding 200 million units.
Beyond smartphone business, in Q2, Xiaomi's smart home appliances revenue increased 66.2% year-on-year; smart electric vehicles and AI and other innovative business segments achieved revenue of 21.3 billion yuan, up 234% year-on-year. As of August 19 closing, Xiaomi-W's total market capitalization was 1.36 trillion Hong Kong dollars.
**Surpassing Apple in European Market**
By business segment, Xiaomi's smartphone and AIoT businesses remain revenue pillars, achieving revenue of 94.693 billion yuan in Q2, up 14.8% year-on-year, accounting for 81.7% of total revenue.
In terms of smartphone revenue, Xiaomi's smartphone revenue in Q2 was 45.52 billion yuan, down approximately 10% from Q1's 50.612 billion yuan, mainly due to declining smartphone ASP (average selling price), though partially offset by increased smartphone shipment volume.
Smartphone ASP decreased 11.3% from 1,210.6 yuan per unit in Q1 2025 to 1,073.2 yuan per unit in Q2 2025, primarily due to the increased proportion of overseas market smartphone shipments with lower ASPs, though partially offset by rising ASPs in mainland China.
However, Q2 smartphone shipments reached 42.4 million units, up 1.5% quarter-on-quarter.
In the domestic market, following Q1's return to first place in China for shipment volume, Q2 saw 11.5 million new device activations with a market share of 16.8%, topping the domestic market.
In international markets, smartphone shipments achieved year-on-year growth for eight consecutive quarters, ranking top three in 60 countries and regions, and top five in 69 countries and regions.
In multiple important global regions, Xiaomi's smartphone shipments and market share continued to improve: Southeast Asia ranking rose to first with market share increasing to 18.9%; Europe ranking returned to second with market share increasing to 23.4%, surpassing Apple for the first time; Middle East and Latin America ranked second with market shares of 18.7% and 19.6% respectively; Africa ranked third with market share increasing to 14.4%.
According to Canalys data, global smartphone shipments in Q2 decreased 2.7% quarter-on-quarter. In comparison, Xiaomi's shipment performance outperformed the overall industry level.
Overall, in Q2 this year, affected by tariff fluctuations, macroeconomic challenges and other factors, market demand remained under pressure, especially as low-end market consumers lowered their spending priority on smartphones. IDC data shows Q2 global smartphone shipments increased only 1% year-on-year to 295.2 million units.
IDC further noted that China's smartphone market shipments in Q2 ended six consecutive quarters of year-on-year growth, with shipments of 68.96 million units, down 4% year-on-year. Meanwhile, "national subsidies" had limited impact on stimulating market demand, with most manufacturers controlling shipment volumes in Q2 to reasonably manage channel inventory levels and using "618" promotions to clear channel inventory.
**Targeting the "200 Million Club"**
"Currently, the smartphone industry has entered a mature phase with almost no growth in the overall market. The brand landscape in the Chinese market is intense, with very small share gaps among the top six," Lu Weibing stated candidly at the earnings conference.
Facing challenges of weak global smartphone market demand and intensified competition, Xiaomi's response strategy is: shifting from pursuing scale expansion to emphasizing both quality and profit, seeking new growth space through premium positioning and ecosystem synergy.
"Although the smartphone market is a stock market, users tend to upgrade when replacing phones, product structure will continue to improve, and average selling prices will continue to rise," he said.
Lu Weibing told reporters that in the Chinese market, Xiaomi continues to adopt a strategy of pursuing both scale and premium positioning simultaneously. In Q2 this year, Xiaomi's high-end smartphone sales in mainland China accounted for 27.6% of total smartphone sales, up 5.5 percentage points year-on-year; market share in the 4,000-5,000 yuan price segment was 24.7%, ranking first domestically; market share in the 5,000-6,000 yuan price segment was 15.4%, up 6.5 percentage points year-on-year.
In Lu Weibing's view, the driving forces in the Chinese market mainly come from two aspects: first, expansion and optimization of new retail stores; second, clear boost to smartphone business from brand momentum successfully created by the automotive business.
"In overseas markets, Xiaomi will adopt differentiated strategies based on different regional characteristics and development stages," Lu Weibing revealed. He cited examples: in European and Southeast Asian markets where Xiaomi has reached second place and overall market space is limited, Xiaomi focuses mainly on product structure adjustment; in emerging markets like Latin America and Africa with significant scale potential, it will adopt a scale-first strategy.
He believes that despite basically no growth in the global market overall, Xiaomi still has significant growth space and is far from reaching a growth bottleneck.
Lu Weibing said that compared to Samsung and Apple, Xiaomi started slightly later, but with infrastructure improvement, deepening localization operations, and continuous new retail breakthroughs, he believes the gap between Xiaomi and the top two will continue to narrow.
He revealed that Xiaomi's short-term goal is to enter the "200 million club" for sales volume, which would create a "three-way competition" situation where Apple, Samsung, and Xiaomi would all have annual smartphone sales exceeding 200 million units. He predicts that the future smartphone industry will form a three-tier brand structure: "200 million club," "100 million club," and "50 million club."
**Continuous Business Structure Optimization**
The analysis also noted that Xiaomi's business structure continued adjusting in Q2 this year. In Q2, smartphone revenue accounted for 39.3%, down approximately 6.2 percentage points from Q1's 45.5%; IoT and lifestyle products revenue accounted for 33.4%, up 4.3 percentage points quarter-on-quarter; internet services revenue share decreased from Q1's 8.2% to 7.8%; smart electric vehicles and AI and other innovative business revenue accounted for 18.3%, up from Q1's 16.7%.
The smartphone business remains Xiaomi's cornerstone, while its other two major growth curves—IoT and lifestyle products, smart electric vehicles and AI and other innovative businesses—are accelerating market expansion.
Looking deeper, IoT and lifestyle products revenue was 38.7 billion yuan, up 44.7% year-on-year to a historical high, with smart home appliances revenue up 66.2% year-on-year; internet services revenue was 9.1 billion yuan, up 10.1% year-on-year; smart electric vehicles and AI and other innovative business segment revenue was 21.3 billion yuan, surging 234% year-on-year.
"In the smart home appliances field, we have a clear strategy: first, having more advanced technology, more stringent quality standards, more premium design, and superior services; second, maintaining our hit product strategy and efficient commercial efficiency to maintain cost-effectiveness; third, not participating in price wars in the home appliance industry, but providing valuable products to users through technological cultivation and user insights," Lu Weibing stated.
Beyond major appliances, he believes numerous small appliances have enormous potential, such as smart door locks and air purifiers showing rapid growth. "We believe through strategic focused investment in IoT categories, innovative product development based on user needs, and product structure optimization, we will maintain long-term sustainable healthy growth in our IoT business," he said.
Additionally, in Q2, Xiaomi's smart electric vehicles and AI and other innovative business segment had an operating loss of 300 million yuan, delivered 81,302 new vehicles, with segment gross margin rising from Q1's 23.2% to 26.4%.
Overall, Lu Weibing believes Xiaomi's "people-vehicle-home" ecosystem has formed a closed loop with enhanced synergistic effects, driving continued high-speed growth across all categories. From a user perspective, Xiaomi smartphones have over 730 million global monthly active users, IoT device connections approach 1 billion, with strong ecosystem scale and connectivity vitality.
Regarding full-year expectations, he expressed confidence in achieving the approximately 30% year-on-year revenue growth target predicted at the beginning of the year. "Driven by smartphone scale growth and premium user increases, internet business maintains steady growth with gross margins staying at high levels; smart automobiles will also achieve good growth as delivery volumes increase. Therefore, we are confident about completing our full-year budget targets for 2025."