Xiaomi uses its automotive business to withstand growth pressure. Will the next performance opportunity be MiClaw?

Interface News Reporter | Wu Yangyu

Interface News Editor | Wen Shuqing

On March 24, Xiaomi Group (HK01810) released its annual performance report for 2025. The company achieved total revenue of 457.3 billion yuan for the year, a year-on-year increase of 25.0%; adjusted net profit reached 39.2 billion yuan, a year-on-year increase of 43.8%, both hitting historical highs. During the same period, research and development investment amounted to 33.1 billion yuan, a year-on-year increase of 37.8%, nearly matching the annual profit.

From a business perspective, the revenue of the mobile×AIoT segment for 2025 was 351.2 billion yuan, a year-on-year increase of 5.4%. Among them, the revenue from the smartphone business was 186.4 billion yuan, a year-on-year decline of 2.8%, with shipment volumes ranking among the top three globally for the fifth consecutive year. Revenue from IoT and lifestyle consumer products reached 123.2 billion yuan, a year-on-year increase of 18.3%; internet service revenue was 37.4 billion yuan, a year-on-year increase of 9.7%, with a gross margin of 76.5%.

The revenue from the smart electric vehicle and AI innovation segments reached 106.1 billion yuan, a year-on-year increase of 223.8%, breaking the 100 billion yuan mark for the first time; the operating profit for the year turned positive to 900 million yuan. In the fourth quarter, the revenue from this segment was 37.2 billion yuan, accounting for 32% of the group’s revenue for the quarter.

In fact, Xiaomi faced some performance pressure in the fourth quarter of 2025. Its mobile×AIoT segment revenue was 79.7 billion yuan, a decrease of 13.65% compared to 92.3 billion yuan in the same period last year, with revenue from the smartphone and IoT lifestyle consumer product segments declining by 13.6% and 20.4% year-on-year, respectively; only internet service revenue saw a year-on-year growth of about 6 percentage points to 9.9 billion yuan.

This is related to various factors such as market demand, macroeconomic policies, and trends in supply chain costs. Xiaomi partner and Group President Lu Weibing stated in an interview with Interface News and other media after the earnings report that in light of external pressures such as rising memory prices, reduced government subsidies, and intensified competition, short-term performance will be under pressure. However, Xiaomi’s goals remain unchanged, and the company will continue to invest in and innovate in areas such as AI chips, Surge OS, and international expansion.

He further responded to the trend of rising memory prices, stating that the speed and intensity of this round of price increases are even more aggressive than his already bold predictions. Xiaomi’s response strategy remains focused on high-end products, a comprehensive ecosystem structure of vehicles and homes, and cost-price advantages in supply relationships.

“We see that some competitors have already started to raise prices, and I can fully understand them because I think everyone is having a tough time,” Lu Weibing said. Xiaomi will try to absorb and withstand the pressure of price increases through technological innovation and other internal measures in the short term. “If we really can’t hold on any longer, we might also have to raise prices, and I hope everyone can understand our actions at that time.”

Lu Weibing also pointed out that during this round of price increases, some manufacturers will inevitably fall into significant losses due to extreme operational difficulties, even leading to potential bankruptcy. Therefore, after this round, the industry structure may undergo a reshaping, and the challenging external environment will also drive certain innovations.

However, it is precisely this unique market condition that highlights the necessity of Xiaomi’s decision to enter the automotive sector five years ago, as well as the inevitability of significant investment in AI technology for the development of smart terminal applications.

Starting from the second quarter of 2024, Xiaomi’s earnings report officially included the “Smart Electric Vehicle and AI Innovation Business” segment. At that time, this segment accounted for only 7.2% of revenue, while smartphones still dominated the company’s revenue with over 50% share. Six quarters later, the automotive segment’s revenue contribution has reached 31.8%, soon to match or even exceed the smartphone segment’s 37.9%.

Considering Xiaomi’s full-year revenue performance for 2025, it is indeed the incremental revenue from Xiaomi’s automotive business that contributes significantly to the company’s overall 25% revenue increase, somewhat mitigating the impact of the decline in the mobile×AIoT segment’s fourth-quarter revenue.

Currently, AI, robotics, automotive, and smart manufacturing are accelerating towards integration, and the significance and value of AI strategy for enterprises are unprecedentedly important. In terms of capital expenditure, Xiaomi’s total R&D investment over the past five years (2021–2025) has reached 105.5 billion yuan. The company disclosed that it plans to invest a total of 200 billion yuan in R&D over the next five years, with expected AI-related investments exceeding 60 billion yuan in the next three years.

In recent years, Xiaomi has spared no effort in emphasizing the importance of AI technology, but aside from the introduction of key technical talent Luo Fuli last year and starting to disclose the progress of the MiMo series models more rhythmically and systematically, Xiaomi’s achievements in AI are still not prominent enough. The emergence of OpenClaw may present an opportunity.

In the previous trend where smartphone manufacturers were competing on AI smartphone concepts, Xiaomi did not participate. However, after the beginning of the year when OpenClaw stirred up another wave of interest in AI agents, Xiaomi became the first domestic manufacturer to launch the mobile lobster “Xiaomi MiClaw.”

Lu Weibing told Interface News reporters that he strongly opposed conceptualizing AI smartphones in the past two years, believing that AI smartphones will undoubtedly arrive, but they will necessitate a significant change in human-machine interaction.

The emergence of OpenClaw has provided Xiaomi with profound insights and explorations on this issue. He believes this is the latest breakthrough toward the agent era and a crucial step for Xiaomi’s AI to land in the comprehensive ecosystem of vehicles and homes, representing a significant historical opportunity for the company. “It (MiClaw) is the prototype of the future AI OS, which is the direction Xiaomi is fully committed to now.”

In addition to the models that have already undergone closed testing, Lu Weibing stated that “Xiaomi MiClaw” has recently added models such as Xiaomi 15S Pro, Redmi K90, and Redmi K90 Pro, and more models will be promoted in the future, extending to categories such as laptops and watches.

Regarding model progress, Xiaomi recently released three self-developed large models targeted at agent applications, namely the flagship base model Xiaomi MiMo-V2-Pro, the all-modal large model Xiaomi MiMo-V2-Omni, and the voice large model Xiaomi MiMo-V2-TTS. The development of Xiaomi Miclaw will also be based on the Mimo series models in the future.