--- title: "Xiaomi: Heaven to Hell — What Still Anchors Conviction?---" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/39484676.md" description: "Xiaomi Corp (1810.HK) released Q4 2025 results (quarter ended Dec 2025) after the HK close on Mar 24, 2026 (Beijing time). Key takeaways: 1) Overall performance.Revenue was RMB 116.9bn (+7% YoY), with all growth driven by the Auto biz, while legacy Smartphones & AIoT revenue fell 13.7% YoY. GPM retreated to 20.8%, mainly on sharp margin compression in Smartphones and IoT. Auto margins also started to decline this quarter..." datetime: "2026-03-24T14:44:09.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/39484676.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/39484676.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/39484676.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # Xiaomi: Heaven to Hell — What Still Anchors Conviction?--- Xiaomi Corp. (1810.HK) released its Q4 2025 results (quarter ended Dec 2025) after the Hong Kong close on Mar 24, 2026 Beijing time. Key takeaways: **1\. Headline results: revenue RMB 116.9bn, +7% YoY**, with all growth driven by autos while legacy businesses (smartphones x AIoT) fell 13.7% YoY. **GPM slipped to 20.8%, mainly on sharply lower margins in smartphones and IoT**, and auto margins also started to decline this quarter. **2\. Autos: RMB 37.2bn of revenue this quarter, broadly in line**. Shipments were 145k units, with ASP down to RMB 250k, largely as SU7 Ultra mix fell. **Auto GPM dropped to 22.7%**, slightly below the street at 23%. Mix shift away from SU7 Ultra weighed on ASP, and the company cleared some display and in-stock vehicles. **Dolphin Research estimates core OP from autos at RMB 1.05bn this quarter, marking a second consecutive profitable quarter.** **3\. Smartphones: RMB 44.3bn, -13.6% YoY, in line with the street at RMB 44.3bn.** Unit shipments fell 11.7% YoY and ASP declined 2.2% YoY. With tougher competition and tighter state subsidies, segment GPM dropped sharply to 8.3%. **By market: domestic smartphone shipments fell 18.2% YoY, while overseas shipments declined 8.8% YoY, with notably weaker performance at home this quarter.** With memory prices still rising, smartphone GPM will remain under pressure. **4\. IoT: RMB 24.6bn, -20% YoY, in line with the street at RMB 24.4bn**, mainly hit by tighter state subsidies and intensified competition. Big-ticket home appliances, more sensitive to subsidies (some products saw RMB 1–2k per-unit subsidies), fell 40% QoQ. **5\. Internet services RMB 9.9bn, +6% YoY, slightly above the street at RMB 9.7bn.** Growth was led by advertising, while value-added services edged down. MIUI MAUs rose 7% YoY, while ARPU fell 1% YoY. By region: **overseas internet revenue was RMB 3.66bn, while domestic internet revenue was roughly RMB 6.23bn**, and MIUI users continued to grow both domestically and overseas. **6\. Profit: core OP RMB 3.2bn**, with adj. net profit RMB 6.3bn. Core OP for $XIAOMI-W(01810.HK) legacy businesses was ~RMB 2.14bn, while autos earned RMB 1.05bn this quarter. $Xiaomi Corporation(XIACY.US) **The decline in core OP this quarter mainly reflected smartphone margin erosion from memory inflation and a sharp IoT revenue drop as state subsidies faded, driving a 68% YoY slide in legacy profit.** **Dolphin Research view: legacy under pressure; autos need stronger new models** Results were broadly consistent with our prior preview. **All the revenue growth came from autos, while smartphones and IoT were clearly under pressure**. **Data this quarter show mounting pressure on Xiaomi:** (i) smartphone GPM fell to single digits; (ii) IoT saw a double-digit YoY decline; (iii) auto GPM fell as weekly orders also weakened. **With memory price inflation and tighter state subsidies, the stock slid from HK$60 to around HK$30, reflecting concerns about both autos and legacy businesses:** **1) Autos: full-year target 550k units** Although **Xiaomi delivered 145k units in Q4 2025, shipments plunged in the first two months of 2026, suggesting the backlog has largely been digested**. As we noted last quarter, **weekly orders had slipped to 4–5k units then, implying fewer than 20k net new orders per month. Ahead of the new SU7 launch in early Mar, weekly orders fell to ~4k**. From another angle, **YU7 delivery lead times on the website have shortened to ~10 weeks, near a normal wait time**, indicating the backlog has been largely cleared. **Supply-demand has flipped from undersupply to oversupply**. As for the latest SU7, the update is a mid-cycle refresh with limited exterior changes and modest hardware upgrades and price increases. **With deliveries projected into May–Jun on the website, it is not shaping up as a blockbuster**. **For 2026, the company still targets 550k auto sales.** With YU7 weekly orders down to low-thousands and a lukewarm response to the refreshed SU7, hitting the target will require more compelling models, potentially the much-anticipated range-extended version. **b) Legacy (Smartphones x AIoT): dual headwinds from tighter subsidies and memory inflation.** **(i) Smartphones**: shipments and margins both fell sharply this quarter, driven by fiercer competition and higher memory costs. Apple's iPhone 17 family adopted a spec bump at the same price, **pushing Apple shipments in China up 20% YoY (market -0.8% YoY), while Xiaomi's China shipments dropped 18% YoY**. **Separately, the jump in memory prices directly squeezed Xiaomi's cost structure.** Per Qualcomm management commentary, 'price hikes' have escalated into 'shortages', which will directly affect handset shipments. **(ii) IoT**: tighter state subsidies directly hit performance, with IoT down 20% YoY this quarter. **In H2 2025, many localities shifted to voucher grabs or lotteries, effectively tightening subsidies.** Big appliances enjoyed subsidies of RMB 1–2k, and the tighter regime curbed end-demand, turning IoT from a growth driver into a drag. In sum, **legacy (smartphones and IoT) faces unavoidable headwinds, and memory inflation will keep margins under pressure. Only meaningful upside from new models can support earnings and the share price**. Under multiple pressures, the stock has continued to fall. **At this stage, it is more important to triangulate a trough valuation**. Under a more bearish scenario (smartphone units -15% YoY and IoT down YoY), legacy revenue slips slightly, autos achieve the 550k target but with lower ASP and margins. **We estimate 2026 legacy core after-tax OP at ~RMB 12.9bn (-46% YoY) and auto revenue at ~RMB 140bn (+32% YoY)**. **Using SOTP with 25x PE for legacy and 1.5x PS for autos (target shipments +34% YoY), we derive ~HK$600bn EV (HKD/CNY=0.88), or ~HK$23/share as a downside reference under a bearish case.** **Given clear headwinds to legacy in 2026,** if memory prices retreat, legacy earnings should recover and 2026 may prove trough-like. **Medium to long term, as hardware margins normalize, legacy core after-tax OP could return to ~RMB 20bn; at 20x PE (range 15–25x), that implies ~RMB 400bn for legacy.** Adding autos at 1.5x 2026 PS implies ~HK$700bn (about HK$27/share). With some investors showing faith in Xiaomi, early positioning is possible. **Overall, Xiaomi faces multiple headwinds: memory inflation, tighter subsidies, intensified competition, and softer auto orders. But with the stock down from HK$60 to ~HK$30, factors like memory and subsidy tightening are partly priced in.** **While a more bearish level sits near HK$23, potential catalysts such as new models and foundation models remain.** Longer term, a safety margin may emerge below HK$25, contingent on memory stabilization and new model execution. Below is Dolphin Research's detailed read of Xiaomi's results: **I. Overall results: autos are the main driver** With autos added, Xiaomi now reports in two buckets beyond 'Smartphones x AIoT': 'Autos and Innovation' and the legacy set. Xiaomi's separate disclosure of 'Autos and Innovation' underscores the strategic focus. The prior break above HK$1tn market cap was also largely driven by auto expectations. **1.1 Revenue** **Q4 2025 revenue was RMB 116.9bn, +7% YoY**, in line with the street at RMB 116.6bn, with growth mainly from autos. **1) Legacy businesses — Smartphones x AIoT — delivered RMB 79.7bn, -13.7% YoY**. Hardware was weak, with smartphones -13.6% YoY and IoT -20% YoY. **2) New businesses, including smart autos, delivered RMB 37.2bn**, driven by higher YU7 shipments. **1.2 Gross margin** Group GPM was 20.8%, broadly in line with the 21% street view. **Smartphone and IoT margins fell sharply, and auto margins also eased**. **a) Legacy GPM was 20%, down 210bps QoQ, pressured by tighter subsidies and memory inflation; smartphone GPM fell to 8.3%.** Other legacy businesses posted a RMB 300mn GP loss, including air-con installation and related services. If allocated to IoT, IoT's 'true' GPM would be ~18.9%. **2) Autos and other new businesses posted 22.7% GPM, slightly below the 23% street view. Mix shift away from SU7 Ultra and sales of display/in-stock vehicles drove the decline QoQ** **II. Autos: can they hit the 550k full-year target?** Auto revenue was RMB 36.3bn, plus peripherals to **RMB 37.2bn, in line with the street at RMB 36.9bn**. **Shipments of 145k were largely known, and ASP was RMB 250k, down RMB 10k QoQ**, due to lower SU7 Ultra mix and sales of display/in-stock cars. **GPM was 22.7%, down 280bps QoQ. Lower SU7 Ultra mix and in-stock/display car sales weighed on ASP, and Phase II plant ramp added D&A, together driving margin pressure.** With shorter website lead times and shipment trends, the YU7 backlog has been largely cleared. **The auto biz has shifted from undersupply to oversupply, so demand-side orders deserve closer watch**. **Before the refreshed SU7 launch, weekly orders had fallen to ~4k, implying <20k per month. The current mid-cycle refresh shows delivery windows mostly in May–Jun, pointing to a lukewarm response.** **Even so, management guided to 550k units for 2026.** Based on current orders, this looks challenging and will likely require stronger new models, possibly a range-extended variant. **III. Smartphones: margin 'breakdown' and share losses** **Q4 2025 smartphone revenue was RMB 44.3bn, -13.6% YoY, pressured by memory inflation, tighter subsidies and tougher competition**. Dolphin Research splits the smartphone business into volume and price: **Volume: 37.7mn units, -11.7% YoY.** By market: **(i) China share fell to 13.2%** (down 2.8ppt YoY) amid tighter subsidies and intensifying competition; **(ii) overseas shipments fell 8.8% YoY with share down 1.2ppt**. **Price: blended ASP was RMB 1,176, -2.2% YoY**, mainly on lower ASPs overseas. **Smartphone GPM was 8.3%, -280bps QoQ**, reflecting weaker overseas ASPs, higher memory and other key component costs, and fiercer competition. **With memory still rising, margins will stay under pressure**. **IV. IoT: tighter subsidies turned it into a 'drag'** **Q4 2025 IoT revenue was RMB 24.6bn, -20% YoY.** Big appliances fell 40% QoQ amid tighter state subsidies, becoming a major drag on IoT. **IoT GPM was 20.1%, -280bps QoQ**, mainly on lower margins in China for smart big appliances. **V. Internet services: steady growth** **Q4 2025 internet services revenue was RMB 9.9bn, +6% YoY**, with ads the main driver this quarter: **a) Ads: RMB 7.8bn, +10.5% YoY.** Core ad scenes are app distribution and pre-installs, effectively the distribution toll for most app publishers, with pre-installs being especially sticky. **b) Value-added:** mainly game distribution, Youpin (e-commerce) and fintech. Revenue was ~RMB 2.1bn, roughly flat YoY, remaining stable. Structurally, this business still relies on hardware shipments for scale. In the revised disclosure, Xiaomi classifies it broadly under Legacy. **Only by combining hardware and software can a handset OEM continue to tell the internet monetization story.** **VI. Overseas: software up, hardware still soft** **Q4 2025 overseas revenue was RMB 36.1bn, -3.1% YoY.** With domestic autos growing, overseas now accounts for ~31% of revenue. **In detail, overseas internet revenue rose 18% to RMB 3.66bn, while overseas hardware fell 5% YoY for the third straight quarter, underscoring weak demand.** **VII. Profit: legacy pressured; autos profitable** **Q4 2025 opex was RMB 21.2bn, with opex ratio up to 18%.** Part of the increase came from autos, where operating expenses rose to RMB 7.4bn. Ex-autos, legacy opex was ~RMB 13.77bn, up YoY and QoQ. **Legacy opex ratio rose to 17.3%, with R&D further increased**. Adj. net profit was RMB 6.3bn in Q4 2025, but Dolphin Research has long **disagreed with Xiaomi's adjustment approach — financial income and investee dividends are not stripped out; even if sustainable, they are not core operations and do not reflect long-term earnings quality.** We focus on core OP (revenue - COGS - opex) as a better gauge of sustainable profitability. **Core OP was RMB 3.2bn, with a 2.7% core OPM**, pressured by weaker hardware margins and higher opex. Specifically, **legacy core OP was ~RMB 2.14bn, and autos ~RMB 1.05bn**. \ Dolphin Research Xiaomi archive: **Product launches** Mar 20, 2026 SU7 refresh '[Xiaomi (Spring Event): SU7 gets a low-key refresh; MiMo free promo to climb the charts](https://longportapp.cn/en/topics/39393374)' Sep 26, 2025 smartphone launch '[Xiaomi (with Trans): Fully taking on iPhone, spec bump at same price](https://longportapp.cn/en/topics/34507180)' Jul 3, 2025 '[Lei Jun roundtable: no low-price 'arms race'; targeting overseas in 2027](https://longportapp.cn/en/topics/31417717)' Jun 26, 2025 YU7 launch '[Xiaomi Auto: YU7 bursts onto the scene — will it knock Tesla off the pedestal?](https://longportapp.cn/en/topics/31207306)' May 22, 2025 YU7 teaser '[Xiaomi (Trans): 'Godfather of Domestic Brands' brings YU7 — is the 'foreign monk' Model Y in trouble?](https://longportapp.cn/en/topics/29969816)' **Earnings season** Nov 18, 2025 call '[Xiaomi (Trans): Memory inflation hits lower-ASP OEMs harder](https://longportapp.cn/en/topics/36478339)' Nov 18, 2025 earnings take '[Xiaomi: with subsidies fading, can autos carry the banner?](https://longportapp.cn/en/topics/36472885)' Aug 19, 2025 call '[Xiaomi (Trans): Smartphone target cut to 175mn, no auto price war](https://longportapp.cn/en/topics/33133597)' Aug 19, 2025 earnings take '[Xiaomi: smartphones face another 'cold snap'; autos to the rescue?](https://longportapp.cn/en/topics/33123787)' May 27, 2025 call '[Xiaomi (Trans): Full-year smartphone target stays at 180mn](https://longportapp.cn/en/topics/30090529)' May 27, 2025 earnings take '[Xiaomi: one hand on autos, one on subsidies — time to win big?](https://longportapp.cn/en/topics/30084817)' Mar 18, 2025 call '[Xiaomi (Trans): Smartphone goal 200mn; no strict profit target for autos](https://longportapp.cn/en/topics/28185109)' Mar 18, 2025 earnings take '[Xiaomi: 'strongest ever' — as good as billed?](https://longportapp.cn/en/topics/28180979)' ### Related Stocks - [MI.US](https://longbridge.com/en/quote/MI.US.md) - [01810.HK](https://longbridge.com/en/quote/01810.HK.md) - [81810.HK](https://longbridge.com/en/quote/81810.HK.md) - [XIACY.US](https://longbridge.com/en/quote/XIACY.US.md) - [HXXD.SG](https://longbridge.com/en/quote/HXXD.SG.md) - [AAPL.US](https://longbridge.com/en/quote/AAPL.US.md) - [QCOM.US](https://longbridge.com/en/quote/QCOM.US.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**