Xiaomi Vows to Work on AI Application following Q1 Earnings Beat

BEIJING, May 24 (TiPost)— Xiaomi Corporation, one of the top smartphone makers in China, vows to explore artificial intelligence (AI) application after it reported financial results much better than the Wall Street expectation.

Source: Visual China

Xiaomi has built a lab for the large-scale AI model in April, and more than 1,200 people now work on AI sector, according to a press along with quarterly financial results released on Wednesday. The mobile giant said it will actively embrace the new round of technological revolution brought out by AI, keep exploring AI-related user scenarios with its tech strengths, and work with partners to discover more opportunities with an open mind.

The first thing Xiaomi wants to do on the big model is to integrate it into businesses deeply to make products and services more intelligent, for an instance, the integration of the voice assistant Xiao Ai, the management told analysts at an earnings call, admitting its AI development is at an early stage.They also want to make use of AI tech to increase overall business efficiency, and suggested Xiaomi could invest in one or two companies that develop AI models.

Xiaomi’s revenue fell 18.9% year-over-year (YoY) to RMB59.5 billion (US4.2 billion) in the quarter ended March 31, still beating the analysts’ estimates of RMB58.1 billion. Its net income of RMB4.2 billion that quarter came in well above the expectation of RM2.54billion, compared with the net loss of RMB587 million the same period last year. The quarterly adjusted net profit reached RMB3.2 billion, also exceeding the expected RMB3.0 billion. That represented a YoY increase of 13.1% and a quarter-over-quarter (QoQ) surge of 121.3%. The overall gross profit declined 8.8% YoY to RMB11.6 billion, while the gross profit margin hit a record of 19.5%, in line with the forecast.  Our new operating strategy of dual emphasis on scale and profitability has delivered results, the founder and CEO Lei Jun commented.

Xiaomi is not out of woods yet as the lackluster demand due to the macroeconomic slowdown lasts. Worldwide shipments shed 13% to 269.8 million in the first quarter, setting a new low the same period since 2014, despite early signs of recovery emerging, , according to Canalys. Data from the tech market analyst firm showed Xiaomi maintained its No. 3 global smartphone shipment ranking in the first quarter, with shipments reaching 30.4 million units and holding a market share of 11.3%.

While Xiaomi’s core business smartphone generated RMB35 billion, a 23.6% YoY decrease, the gross margin edged 3.1 points higher from the previous quarter to 11.2%. The company attributed the increase in margin to its premiumization strategy in a fiercely competitive industry. The average selling price (ASP) of smartphones in mainland China reached a new quarterly high, up more than 18% YoY. Its smartphone shipments in the RMB4,000-RMB5,000 price segment ranked No. 1 in mainland China among Android smartphone brands, with a market share of 24.1%, representing a YoY increase of 7.7 percentage points.

Xiaomi said its internet service maintained solid performance with the revenue of RMB7.0 billion, down 1.2% YoY. The gaming revenue jumped 16.3% YoY to RMB1.3 billion, driven by the recovery of the domestic market.  Gaming saw the seventh consecutive quarter of yearly increase. The monthly average user (MAU) of MIUI, Xiaomi’s mobile user interface (UI) reached record highs as of March, both globally and in mainland China. Global MAU of MIUI reached 594.8 million, an increase of 12.4% YoY, and MAU of MIUI in mainland China reached 146.2 million, up 7.8% YoY.

Xiaomi management disclosed development of one of its highly anticipated new business—electric vehicle (EV) is still very well, so they maintained the previous target of mass production in the first half of 2024. Lei Jun said research and development (R&D) in the first quarter increased 17.7% YoY to RMB4.1 billion, and investments in initiatives including EV stood at RMB1.1billion. The annual R&D expense is expected to be more than RMB20 billion.

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