On Wednesday, Hong Kong-listed shares of Xiaomi, the world's third-largest smartphone maker, surged by as much as 3.4% in early trading, reaching HK$53.3 before paring some of those gains to trade around 0.6% higher later in the session. This strong showing has propelled Xiaomi's market capitalization to approximately $171 billion, according to LSEG data, surpassing even BYD, China's largest electric vehicle (EV) manufacturer, which holds a market value of roughly $160 billion.
The shift towards premiumization is evidently yielding significant returns for Xiaomi. Its Q1 revenue soared by 47.4% year-on-year to a record RMB 111.293 billion (US15.4 billion), while adjusted net profit surged by an impressive 64.5% year-on-year to a historic high of RMB 10.676 billion (US1.48 billion). This robust growth was driven by continued strength in its smartphone and IoT segments, with smartphone revenue rising 8.9% and IoT revenue jumping 58.7%. The company also reported EV sales of RMB 18.1 billion, although its EV division is still operating at a loss, albeit a narrowing one.
Analysts suggest that Xiaomi's diversified business model has provided it with a crucial advantage, allowing it to better navigate the intense price war currently raging within the Chinese electric vehicle sector. In this highly competitive market, major manufacturers are aggressively cutting prices to attract customers. However, Xiaomi's broader ecosystem of products seemingly offers a buffer against these pressures.
"The key difference between Xiaomi and other companies is that it’s not simply a smartphone company or a car OEM (original equipment manufacturer)," explained Will Wong, a senior smartphone analyst at research firm IDC. Wong emphasized that Xiaomi can be viewed more as a "lifestyle" company, providing a wide array of everyday products to consumers. This comprehensive approach differentiates it from competitors focusing solely on one product category.
Despite the strong performance, Wong cautioned that broader economic uncertainties, particularly those stemming from global trade tensions, could still pose a downside risk for the company. Nevertheless, Xiaomi's ability to leverage its brand loyalty and interconnected product ecosystem appears to be a significant asset in its continued growth trajectory. The company's "Human x Car x Home" strategy, which aims to create a seamlessly integrated smart ecosystem for consumers, is clearly bearing fruit and positioning Xiaomi as a formidable player across multiple technological fronts.