From Beijing to Europe: Xiaomi's strategy to conquer three markets

Xiaomi ended Q2 2025 with results that confirm its transformation from smartphone manufacturer to diversified technology conglomerate. Revenues rose 30.5% year-on-year to $16 billion, the fifth consecutive quarter of double-digit growth. Adjusted net income soared 75% to $1.5 billion, while reported net income more than doubled to $1.6 billion. Profitability is supported by a gross margin at 22.5 per cent, up two points.

The core business of smartphones retains the largest weight but is no longer the sole driver. The division's revenues fell 2.1% to USD 6.3 billion, with shipments stable at 42.4 million units. Competitive pressure in China and India is being felt, while in Europe - where Xiaomi is second with 23.4% share - and South-East Asia, performance remains robust. The premiumisation strategy seems to be winning: in China, models over USD 400 account for 27.6% of sales, up from 22% last year.

A prominent role is played by the proprietary XRing O1 chip, launched in May: a 10-core processor on 3nm technology that equals Apple's A18 Pro in benchmarks and outperforms it in some tests. With a team of 1,000 people led by a former Qualcomm executive, Xiaomi aims for independence from external suppliers to better control hardware-software integration in the ecosystem.

The biggest surprise in the quarter's accounts came from the IoT and lifestyle products segment, which reached a record $5.3 billion (+45%). Smart home appliances - air conditioners (+60%), refrigerators (+25%), washing machines (+45%) - and tablets (+42%) led the way, with Xiaomi now the fifth global player. Wearable devices and the new AI glasses also confirm the group's ability to preside over the "Human x Car x Home" ecosystem.

The most dynamic item, however, was electric vehicles and new AI initiatives: $2.9 billion (+234%), accounting for a fifth of total revenues. Deliveries reached 81,300 units (+198%), with the YU7, a premium suv launched in June, recording 240,000 orders in 18 hours. Operating losses were reduced to USD 41 million, with gross margins rising to 26.4%. According to Daiwa, the break-even could arrive by the end of 2025.