Xiaomi’s Strategic Pivot: AI as Core Pillar

In May 2025, Xiaomi renamed its business division to “Smart EV, AI & Innovation”, signaling AI’s elevation to strategic parity with automobiles. President Lu Weibing declared:  

“AI and in-house chips are our twin engines for the next decade.”  

Benchmarking Li Auto: Li Xiang (Li Auto CEO) stated in 2024: “Foundation models are the OS of the AI era.” Xiaomi’s move aims to dominate the smart EV race.  

R&D Shift: Xiaomi abandoned its 2023 stance of “no general AI models”, now investing heavily in foundation LLMs.  

Core Business: Phones Rebound + Cars Soar

Smartphone Revival  

Global shipments: 41.8M units (+3% YoY), ending 3-year decline.  

Regained China’s #1 market share (per Canalys) via offline expansion: 16,000 stores (+1,000 in Q1), on track for 20,000 by 2025.  

In-house chip XRING O1 debuts in flagship phones, with 5G modem R&D underway.  

EV Business Breakthrough  

SU7 orders exceeded 300,000, delivery backlog >30 weeks.  

New model YU7 targets mid-range segment, but SU7 will not cut prices.  

AI Strategy: Vertical Integration Over General AI

Xiaomi avoids costly general models like GPT-5, focusing on domain-specific deployment:  

✅ Smartphones:  

Upgrading voice assistant “Xiao Ai” with self-developed LLMs (previously used Alibaba’s Tongyi and ByteDance’s Doubao).  

Preventing “Apple’s mistake”: Apple’s AI lag contributed to Microsoft overtaking its market cap.  

✅ Electric Vehicles:  

Developing end-to-end autonomous driving to replace high-precision maps (similar to Tesla FSD V12).  

Li Xiang’s warning: “EV makers without foundation models will lose in smart driving.”  

✅ IoT Ecosystem:  

AI Glasses: Partner prototypes launched, Xiaomi-branded version due in 2025.  

Humanoid Robots: Reviving CyberOne project (unveiled 2022), competing with XPeng’s IRON and Tesla Optimus.  

Talent Acquisition: Recruited Luo Fuli (lead developer of open-source model DeepSeek V2) in 2024 to lead mobile-optimized model compression.  

Kingsoft: Unpaid Chairman, Iron Control

On June 4, 2025, Kingsoft WPS reappointed Lei Jun as Honorary Chairman (no salary), highlighting:  

Ownership Chain: Lei Jun → Kingsoft Software (15.31%) → Kingsoft WPS (controlling 67.5% stake).  

Business Moats:  

2024 revenue: ¥5.12B (+12%), net profit ¥1.65B (+25%).  

WPS: 632M global MAUs, 100M daily PC users in China.  

R&D spend: ¥1.7B (33% of revenue), focused on AI document processing (e.g., PPT auto-generation).  

Strategic Move: Acquired remaining 31.98% stake in subsidiary Shuke Wangwei (¥254M) to strengthen OFD technology for government clients.  

Lei Jun’s Ecosystem Blueprint

Through the triad of Xiaomi (Hardware+AI) + Kingsoft (Software) + Shunwei Capital (Investments), Lei is building a Chinese analog to “Apple + Microsoft + OpenAI”:  

Short-term: Achieve profitability for Xiaomi Auto in 2025, solidify premium phone positioning.  

Long-term: Make foundation models the “OS” for an integrated phone-car-smart home ecosystem.