In the first quarter of 2023, Xiaomi experienced an 18.9% year-on-year decrease in revenue, totaling RMB 59.5 billion (USD 9.2 billion). However, the company managed to achieve a 13.1% year-on-year increase in adjusted net profit, reaching RMB 3.2 billion (USD 497 million), thanks to cost optimization measures. Xiaomi’s smartphone revenue declined by 23.6% to RMB 35 billion (USD 5.4 billion), while IoT and consumer product revenue decreased by 13.6% to RMB 16.8 billion (USD 2.6 billion).
To combat the revenue decline, Xiaomi has established an AI team, consisting of over 1,200 personnel. This team was formed in April following Xiaomi’s announcement in March regarding its exploration of AI large-scale models. However, unlike its peers Baidu and Alibaba, Xiaomi does not intend to study general-purpose models. Instead, the company plans to invest in external projects, develop large-scale model tracks, and integrate third-party large-scale model products into its existing product system.
Xiaomi’s mobile phone business, which accounts for 58.8% of its revenue, experienced a 21.1% year-on-year decline in sales during the first quarter of 2023, selling 30.4 million units. This decline is part of a broader trend in the global smartphone market, where shipments dropped 13.3% year-over-year to the lowest level since 2014. The Chinese smartphone market also experienced an 11% year-over-year decline in shipments, reaching its lowest first-quarter level since 2013.
Furthermore, Xiaomi’s overseas revenue fell 28% year-over-year to RMB 27 billion (USD 4.2 billion) in the first quarter of 2023. India and other overseas markets accounted for the majority of the 8 million fewer smartphone sales compared to the same period last year. Additionally, Xiaomi’s IoT product revenue, including smart TVs and laptops, decreased by 24.2% year-over-year to RMB 4.7 billion (USD 730 million).
In addition to its challenges in the consumer electronics market, Xiaomi’s venture into car manufacturing faces uncertainties. With mass production slated for Q1 2024, Xiaomi’s first car may struggle to compete with first-line new energy vehicle brands such as Xiaopeng, Li Auto, and Tesla. The price range of Xiaomi’s vehicles, priced between RMB 260,000 (USD 40,000) and RMB 300,000 (USD 46,500), puts them in direct competition with Tesla’s lowered starting price for the Model 3.