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Themis Qi

Chinese technology giant Xiaomi has said it is “in no rush” to convert its large investments in artificial intelligence into profit, after recording another decline in net profits in the second quarter amid intense competition and cost inflation.
“Our investment in AI is currently still in a phase of large-scale input. However, as a large corporation, Xiaomi is in no rush to pursue immediate monetisation,” said Alain Lam, the firm’s vice-president and chief financial officer, during an earnings call on Tuesday evening.
The comment comes as tech firms in China and the United States ramp up capital expenditure to power their AI development, even as market concerns rise over whether the investments will generate sufficient returns.
In the first half of the year, Xiaomi’s spending on research and development jumped 25.6 per cent year on year to 18.2 billion yuan (US$2.7 billion), with AI-related inputs accounting for nearly 30 per cent of the total, Lam said on Tuesday.
“The prices of memory are still high and the competition remains fierce. But the short-term pressure will not change our strategy for the long run,” said Lu Weibing, partner and president of Xiaomi, during the call.
Earlier on Tuesday, the Beijing-based smartphone and electric vehicle maker reported that its revenue for the April-June period had fallen 6.1 per cent year on year to 108.9 billion yuan. Its net profit also slumped for the third consecutive quarter, dropping 20.3 per cent year on year to 9.46 billion yuan.

However, the figures beat analysts’ projections of 108.3 billion yuan in revenue and 5.68 billion yuan in net profit for the quarter. Notably, Xiaomi booked 6.46 billion yuan of paper gains from financial instruments and 2.16 billion yuan of other income, which the firm said came primarily from private investments and subsidies, respectively, according to an exchange filing.
Second-quarter revenue from electric vehicles (EVs) grew 15.9 per cent year on year to 20.6 billion yuan, recovering from 6.9 per cent growth in the January-March period but far slower than the 233.9 per cent surge logged a year earlier.
Amid weakening demand and sticky competition in the Chinese car market, Xiaomi’s monthly EV deliveries hovered around 34,000 units in the second quarter and slipped to 31,267 units in July, falling behind domestic rivals including Xpeng and Leapmotor.
The EV business was regarded as a bright spot for Xiaomi, but sluggish sales made it difficult for the firm to meet its delivery target of 550,000 vehicles this year, analysts at JPMorgan and Bernstein said in recent research notes.
Deutsche Bank, in a note on August 3, lowered its full-year forecast to 490,000 units, citing late delivery of the SkyNomad SUV unveiled in late July.
Rising component costs dragged the gross profit margin of the segment including EVs to 19.2 per cent for the April-June period, down from 26.4 per cent a year earlier, while the average selling price dipped 9.5 per cent year on year to 229,312 yuan per unit.
Smartphones, Xiaomi’s largest revenue contributor, saw second-quarter revenue fall 7.5 per cent year on year to 42.1 billion yuan. Home appliance and internet-of-things products also declined 19.2 per cent to 31.3 billion yuan.


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The Chinese tech firm has seen its net profits decline for three consecutive quarters, as it rapidly ramps up AI-related R&D spending


The Chinese tech firm has seen its net profits decline for three consecutive quarters, as it rapidly ramps up AI-related R&D spending.


Xiaomi ‘in no rush’ to turn vast AI spending into profits despite earnings slump

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The Chinese tech firm has seen its net profits decline for three consecutive quarters, as it rapidly ramps up AI-related R&D spending

The Chinese tech firm has seen its net profits decline for three consecutive quarters, as it rapidly ramps up AI-related R&D spending