Xiaomi is prioritizing the increase in average selling price (ASP) of its smartphones as its primary operational focus for 2026, while significantly boosting investments in artificial intelligence to transform its entire business line, and has set an ambitious annual delivery target of 550,000 units for its electric vehicles. As the world's third-largest smartphone brand, the company is driving multi-year expansion through its "Human x Car x Home" ecosystem strategy.

According to a recent Goldman Sachs research report, the investment bank hosted a China automotive management outlook conference call on January 5-6, 2026, during which Xiaomi executives provided detailed disclosures on the company's latest strategic deployments across its three core business segments: smartphones, AIoT, and smart electric vehicles.

The report stated that Xiaomi's General Manager and Senior Manager of Investor Relations indicated on the call that the company is executing an extremely aggressive yet clearly defined capital expenditure plan, with an R&D budget of RMB 200 billion for 2026-2030. This plan aims to integrate the "Human x Car x Home" ecosystem through foundational technologies, including self-developed chips and large AI models.

The report highlighted that Xiaomi's management acknowledged facing short-term macroeconomic headwinds from soaring memory chip costs. However, they are attempting to mitigate these risks through product premiumization, price increases, and enhanced supply chain management. Concurrently, the AIoT segment is targeted for growth, with plans to expand the number of Xiaomi Home stores to over 1,000. Overseas AIoT operations are viewed as a key future growth engine.

Goldman Sachs noted that Xiaomi executives emphasized the most critical catalysts lie in the realization of economies of scale in the EV business, with the 2026 delivery target raised to 550,000 units, and the potential for self-developed chips to replace external suppliers like NVIDIA.

Goldman Sachs maintained its "Buy" rating on Xiaomi with a target price of HK$53.5, implying nearly 40% upside from the current price of HK$38.18.

Regarding the smartphone business, the report cited Xiaomi executives stating that in response to industry-wide memory chip shortages and cost surges, the company's strategy is no longer purely defensive. Instead, it aims to transfer cost pressures by increasing the Average Selling Price (ASP).

First and foremost, Xiaomi executives clearly stated that the primary operational focus for 2026 is to raise smartphone ASPs. The specific method is straightforward yet effective: price hikes. For instance, the upcoming Xiaomi 17 Ultra is set to be priced RMB 500-700 higher than the Xiaomi 15 Ultra.

Confronted with rising memory prices, Xiaomi management admitted that the current memory price uptrend is "unprecedented." They anticipate the price increase trend will persist in the first half of 2026, potentially slowing in the second half. However, visibility for 2027 remains limited due to the explosive growth in AI-related demand.

Xiaomi executives indicated that compared to pure-play smartphone OEMs, Xiaomi's advantage lies in its massive order volumes and diversified business structure. They believe there is significant potential for gross profit margin (GPM) improvement if memory costs normalize in the medium term.

Simultaneously, Xiaomi executives stressed the high strategic importance of the Chinese market, serving as the starting point for its premiumization strategy. The company aims to increase its market share in China by one percentage point annually.

The AIoT segment, alongside internet services, is positioned as a profit stabilizer for Xiaomi. Following approximately 20% year-on-year revenue growth and a 2-2.5 percentage point gross margin expansion in 2025, Xiaomi management expects 2026 growth to be driven by both government subsidies for consumer electronics and home appliances, and overseas expansion.

The company targets increasing the number of Xiaomi Home stores from around 500 in 2025 to over 1,000 in 2026, while also expanding product categories and exploring collaborations with cross-border e-commerce platforms like AliExpress. Management noted that overseas AIoT revenue currently accounts for about 30% (based on Q3 2025 data), while overseas smartphone revenue has already reached 60%. The latter is seen as a reference target for the long-term potential of AIoT's overseas expansion.

By product category, major home appliances contribute approximately 20% or more of revenue and have been a strategic business since 2023; TVs and PCs account for 15-20%; tablets around 15%; wearables about 10%; with the remainder coming from a wide range of ecosystem products.

The company plans to maintain its 2026 gross margin at no less than the 2025 level by reducing low-margin categories, increasing self-developed products, and avoiding aggressive discounting.

Goldman Sachs reported that Xiaomi's EV production ramp-up has exceeded market expectations. Xiaomi has announced a 2026 delivery target of 550,000 units, a significant increase compared to the over 410,000 units delivered in 2025, which itself surpassed initial and subsequently raised targets.

Xiaomi executives attributed the growth momentum to improvements in manufacturing capacity on the supply side, and confidence in demand for the SU7 facelift model and a third model based on a new platform, scheduled for delivery in the first and second half of 2026 respectively.

As manufacturing capacity catches up, the company will increase consumer incentives and marketing activities. The third model will target a different user group than the SU7/YU7, and management expressed strong confidence in its success.

Management considers a gross margin above 20% to be healthy for smart EVs, achievable through supply chain management capabilities, a methodology for creating hit products, and the high efficiency of its new retail channels. However, the 2026 gross margin might be lower than 2025's due to the impact of purchase tax subsidies offered for orders locked in before November 30, 2025, for delivery in 2026, and a decrease in the proportion of SU7 Ultra deliveries.

The report indicated that Xiaomi reaffirmed its focus on the premium automotive market, citing that vehicles priced above RMB 150,000 constitute 50% of China's 20 million annual passenger car sales but account for 80-90% of total industry profits. Premium EVs are driving the premiumization of the Xiaomi brand and supporting its long-term goal of becoming a top-five global automotive player within 15-20 years. The company plans to begin EV exports to Europe starting in 2027, viewing Europe as a unified and premium market.

Goldman Sachs reported that Xiaomi executives stated on the call the company is committed to investing RMB 200 billion in R&D from 2026 to 2030, primarily focused on AI, intelligent driving, and chips.

AI investments accounted for approximately 25% of Xiaomi's RMB 32-33 billion R&D expenditure in 2025, equating to about RMB 8 billion. While the company plans to increase AI investment in 2026, management will maintain a reasonable level, believing current computing resources are sufficient.

Xiaomi aims to leverage AI to empower its ecosystem and internal operations, rather than selling AI capabilities to third parties. It positions itself as the only smartphone brand with its own foundational large model.

In intelligent driving, Xiaomi has a team of 1,800 professionals. The enhanced HAD released in November 2025 incorporated reinforcement learning and world models on top of the version trained on 10 million video clips released in June.

As of 2025, 91.26% of Xiaomi EV users were active users of intelligent driving features. The company plans to launch VLA-assisted driving in 2026 and obtained an L3 autonomous driving road test permit in Beijing by the end of 2025.

Regarding chip investments, Xiaomi had previously announced a plan to invest RMB 50 billion over ten years starting from 2021, having invested RMB 13.5 billion over the past four years in developing the XRING O1 chip.

With the capability for 3nm SoC design following the mid-2025 launch of its self-developed XRING O1 chip, the company expressed confidence in developing its own smart EV chips, potentially replacing the NVIDIA DRIVE AGX Thor chip currently used in the YU7.