---
title: "Xiaomi: Aims to Become One of the Top Five Global Car Brands (4Q23 Earnings Call Summary)"
description: "XIAOMI-WR (1810.HK) released its 2023 fourth quarter financial report after the Hong Kong stock market closed on the evening of March 19, 2024 (Beijing time). The following is a summary of XIAOMI-W's "
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/20014089.md"
published_at: "2024-03-19T15:14:08.000Z"
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# Xiaomi: Aims to Become One of the Top Five Global Car Brands (4Q23 Earnings Call Summary)

XIAOMI-WR (1810.HK) released its fourth quarter financial report for 2023 on the evening of March 19, 2024, Beijing time (as of December 2023).

**Below is the summary of XIAOMI-W's 2023 fourth quarter financial report conference call. For a detailed interpretation of the financial report, please refer to "** [**"XIAOMI-W: Only able to tell new stories through cars"**](https://longportapp.cn/zh-CN/topics/20013769) **》**

**I.** $XIAOMI-W(01810.HK) **Financial Highlights:**

**II. Detailed content of the financial report conference call**

**2.1. Key points from the management's statements:**

1.  Performance overview:

① Performance summary: Total revenue in 2023 reached 271 billion RMB, with adjusted net profit of 19.3 billion RMB, a year-on-year increase of 126%, and a record high gross profit margin of 21%.

In the fourth quarter, total revenue was 73.2 billion RMB, with consecutive year-on-year growth for two quarters, and adjusted net profit of 4.9 billion RMB, an increase of 236%.

② Performance breakdown:

Smartphones: Revenue in 2023 was 157.5 billion RMB, accounting for 58.1% of total revenue. Fourth quarter revenue was 44.2 billion RMB, a year-on-year growth of 20.6%.

IoT and consumer products: Revenue in 2023 was 80.1 billion RMB, with a gross profit margin of 16.3%, a year-on-year increase of 1.9 percentage points.

Internet services: Revenue in 2023 was 30.1 billion RMB, a year-on-year growth of 6.3%, with a gross profit margin of 74.2%.

1.  Smartphone business: XIAOMI-W continued to make breakthroughs in the high-end smartphone market, with its 14 Pro model gaining market recognition in the price range of 5000 to 6000 RMB. **In the 4000 to 6000 RMB price segment in China, its market share reached 28%, a year-on-year increase of 20.6 percentage points**. Globally, smartphone shipments remained in the top three, with annual growth in market share of XIAOMI-W smartphones in important markets such as the Middle East, Latin America, and Africa.
    
2.  IoT and consumer products business: Shipments of IoT and other consumer products such as air conditioners, refrigerators, and washing machines showed significant growth, with growth rates of 49%, 105%, and 24% respectively, demonstrating successful product diversification
    
3.  Internet Service Business: Internet service revenue exceeded RMB 30 billion for the first time, a year-on-year growth of 6.3%, demonstrating steady growth in service business. The global monthly active users reached 641 million, a growth of 10.2%, with Chinese users growing by 8.3%.
    
4.  Research and Development Investment: R&D investment in 2023 was RMB 19.1 billion, a 19% increase, with R&D personnel accounting for 53% of total employees. The company will continue to increase R&D investment, focusing on technological innovation such as HyperOS, AI feature phones, etc.
    
5.  Outlook: XIAOMI-W will continue to deepen its presence in the fields of smartphones, IoT, internet services, and new businesses, especially the advancement of its automotive business, which is expected to bring new historic development opportunities for XIAOMI-W.
    

**2.2, Q&A Analyst Q&A**

**Q: Can you share the company's expectations for smartphone shipments and market shipments? How do you view the changes in the competitive landscape in different markets?**

A: By 2024, the smartphone market is expected to grow slightly, possibly by 1 to 2 percentage points, without significant growth. As for XIAOMI-W, our growth target will be well above the industry average. We mainly focus on the Chinese market, developed overseas markets, and emerging markets. We have seen growth of over 100% in the Southeast Asian market. In Europe, XIAOMI-W's market share exceeded 20% last year, so we believe we will compete with Samsung and Apple in the European market. In emerging markets, there are significant differences in different regions, but in markets like Africa, Latin America, and Southeast Asia, we expect strong growth in XIAOMI-W's market share.

**Q: Regarding your high-end products, the 14 Pro and 14 Ultra have been hugely successful. Can you talk about the secrets to this success?**

A: The secret to success lies in XIAOMI-W having a universal methodology that applies to different fields, not limited to the Chinese market. Therefore, we believe we have the right methodology to drive our high-end strategy. But I think the most important step is continuous investment in technology and products to bridge the gap with cutting-edge technology.

**Q: In 2024, some peers have started intense promotional activities, with some even raising shipment targets. How do you view the situation in the high-end markets in China and overseas in the coming year?**

A: We will not consider imitating some of the measures taken by other competitors. Before the launch of XIAOMI-W 14, there was a strong sense of pessimism in the industry. However, we have proven our momentum in the high-end market. In 2024, we expect strong progress in both the Chinese and overseas markets, especially in China.

Last year, we gained a good market share in the price range of RMB 4000 to 6000 and plan to enter the price range of RMB 6000 to 10000. Additionally, in overseas markets, we have gained market share in the price range of 100 to 500 euros, which will bring us new growth opportunitiesOur average selling price in China has grown by over 19% year-on-year, indicating the success of our high-end strategy. Our market share in China continues to grow, especially in the price range of 4000 to 6000 RMB, where we have become a leading Android phone brand. Last year, in the high-end smartphone market in China, our market share exceeded 20%, accounting for 20% of the total shipments, an increase of over 2.5 percentage points. These numbers demonstrate the significant progress we have made in the high-end product market.

**Q: In January 2024, your sales in Southeast Asia grew by 100% year-on-year. Could you share why your sales performance was so significant, far exceeding other competitors? Did you set specific sales targets for the Southeast Asian market in 2024?**

A: During the period from 2020 to 2022, we paused all overseas visits. By 2023, we increased our focus on overseas markets and conducted a series of research, including my visit to the Southeast Asian markets in 2023, including Indonesia, Thailand, and Malaysia. We believe there are huge opportunities in these markets, so we adjusted our strategy and intensified our research in that market.

Of course, the 100% growth you mentioned is data for a single month, and there are seasonal factors in January for the Southeast Asian market, influenced by the Chinese New Year. However, I believe the Southeast Asian market has strong growth momentum. In 2024, we expect to gain a higher market share. These countries have shown very good growth momentum, especially the Philippines and Vietnam. In Vietnam, we became the leader among all phone brands within a month.

**Q: In 2024, will you collaborate with other AI platforms such as Google's Gemini? If not, will you rely on your own AI research and development capabilities to launch more competitive new features?**

A: We have seen the AI capabilities of other competitors who are still collaborating with Google. Of course, we are also an important partner of Google. Therefore, we will collaborate with them to develop some features, but we will check for compatibility. **So, we collaborate with them but also conduct independent research and development.** Last Saturday, I compared the AI features between XIAOMI-W and Samsung phones, and we can see the different AI features of these two phones. I believe Samsung does not have a clear advantage. Some of the AI features we developed are not available on Samsung phones. Of course, if there are some features on Samsung phones that we do not yet have, we will introduce them in the future as appropriate.

**Q: The gross profit margin has increased by 8 percentage points, mainly due to the growth in market share? The sales of the 14 series were very good last year, and inventory levels have now returned to a healthy level. Will we continue to maintain cost advantages in the coming quarters? How does XIAOMI-W plan to maintain its advantage in gross margin and cost in the future? In 2024, what are your plans to maintain a very reasonable healthy level?**A: There are two reasons for the increase in gross profit margin: **product mix and cost reduction**. Last year, these two factors had a positive impact on our gross profit margin, **mainly due to the decrease in memory costs**. Recently, the prices of memory and screens have rebounded, but the costs of other components have decreased. Despite the price increase of other components, our IoT strategy advantage is evident because we have other IoT categories.

Looking at the product mix, especially smartphones and changes in cost structure, **we have done quite well in inventory management**. Our inventory performance will also offset the decline in average selling prices, as we are able to sell some existing products to offset the profit decline. This is the first reason. In the fourth quarter of 2023, we also adjusted our accounts receivable strategy, which had a one-time impact on the gross profit margin in 2024. But not in 2023. All these factors have helped us improve the gross profit margin of the smartphone business.

Thanks to our "human x home x car" ecosystem, we can avoid paying too much attention to the changes in the gross profit margin of the smartphone business, as our overall gross profit margin level has been very stable, staying above 20%. So we will focus on the gross profit margins of different markets and product categories, as our focus is on the "human x home x car" system.

**Q: Last year, the growth in your home appliance business offset the decline in TVs and laptops. But this year, the demand for IoT will be stronger, especially in overseas markets. What are your expectations for the growth of the overseas IoT market?**

A: In 2024, we expect significant growth in wearable devices and tablets. Over the past two years, we have been one of the top five tablet brands and will soon be in the top three. I believe XIAOMI-W will show strong growth momentum. We are also continuously developing product strength. As for the laptop business, we have returned to a healthy level. The TV business has been integrated into the smartphone department, and in 2023, due to business strategy adjustments, there may be some revenue decline in TVs and laptops, but we still have room for market share growth as we have not reached the ideal level yet. The business is now starting to recover, with both average selling prices and gross profit margins increasing.

We are laying the foundation for the ecosystem, and we can expect strong growth in the ecosystem in the future. In the IoT business, especially in overseas markets, we have huge potential, although our share in overseas IoT business is currently small, there is huge room for growth.

**Q: Can you share more information about the automotive business? Do you have sales targets by the end of the year? Also, I would like to know the role of automotive products in the "human x home x car" ecosystem and their contribution to your internet services?**

A: We will launch the SU7 on the 28th of this month. In terms of sales channels, we have learned from past experiences and adopted a new retail model, **including our own delivery centers and 2S stores**. We plan to strengthen the integration of cars with 3C products and expand the sales range of offline stores. **Customers can purchase our cars at XIAOMI-W stores, 2S stores, and delivery centers**XIAOMI-W Home provides high-quality digital services. After the product launch, **you can experience our cars in 60 stores in 29 cities. We are recruiting new dealers nationwide to meet market demand**. As our automotive business grows, we will establish a better business model to enhance customer reliance on XIAOMI-W products, bringing more benefits to internet services.

**Q: Regarding your automotive business, SU7 is highly anticipated. Do you have any new product plans currently in development?**

A: Our goal is to become one of the top five global automotive brands. This year, we launched our first C-class luxury sedan, with a development cycle of 3 years. While we are developing future products, we are unable to disclose details at this time. The most important focus currently is to ensure the successful market launch of current products, and to enhance customer satisfaction and experience.

**Q: What are the potentials and opportunities for XIAOMI-W in large-scale language models? Can you share some information about AI applications on terminal devices?**

A: XIAOMI-W adopts a strategy that combines devices with the cloud. Although local deployment cannot match cloud technology, it has lower costs and good privacy protection. We see that local devices have higher computing power and efficiency for large models, leading to lower costs and higher efficiency. In the 14 series, we have integrated many AI features, and through local functions, 14 Ultra and 14 2.0 will further enhance AI capabilities.

**Q: In terms of internet services, both revenue and gross profit margins have reached historic highs, especially in advertising revenue. How do you plan to increase the profitability of internet services, particularly in advertising business?**

A: Firstly, existing customer growth is crucial for us. **Last year, global existing customers increased by 10%, adding 60 million users**. We believe that internet services are not only for smartphones, but also include devices like laptops and tablets. Customer contributions are crucial for the high-end market, and we are working to improve customer experience and increase customer payment capabilities.

In terms of internet business, both customer numbers and high-end customers will increase. Last year, the overall market's advertising investment grew significantly, which is a boost for our business. With the growth of the user base in overseas markets, our monetization capabilities in international markets have also strengthened. Overseas markets account for 28% of the entire internet services, with some advertising revenue coming from overseas as we collaborate with more business partners, attract more advertisers, and have a larger user base.

**Q: Considering your independent strategy, how do you view the competition in the smartphone market, especially in overseas markets like Latin America?**

A: Competition is normal, and no year is particularly intense. For XIAOMI-W, Latin America and Africa markets have huge potential.

In Africa, our shipments grew by 45% last year, while the market only grew by 6%, and our market share is less than 10%, so there is still room for growth. Specifically, in North Africa, such as Egypt, Morocco, and Algeria, our market share has reached 20%This means that in sub-Saharan Africa, our market share may be less than 9%, while in North Africa it reaches 20%. In Nigeria, the largest market in Africa, our market share has reached 20%, indicating that we have the same potential in other markets, as 20% is our market share ceiling.

In Colombia, Latin America, our market share reaches 30%, while in Argentina it is only 5%. The Latin American market has only grown by 2%, while we have grown by 11%. Our market share in Latin America is 16%, ranking third in the market. Clearly, XIAOMI-W still has growth potential in the smartphone market.

**Q: How do you apply artificial intelligence technology to enhance your ecosystem and operating system?**

A: For example, if you experience the intelligent system in our cars, you will find that our artificial intelligence system is equipped with large models that can accurately understand inputs. In the future, artificial intelligence will become an important component of all our products, including all products in the ecosystem. If you look at our operating system, you will find something called HyperMind. This means that in the future, we hope that artificial intelligence can actively perceive human needs rather than passively receive human instructions.

**Q: With strong demand in emerging markets, as a global brand, besides smartphones, will you launch more products overseas in 2024?**

A: Emerging markets are crucial for XIAOMI-W, including Latin America, the Middle East, Africa, and Southeast Asia. These markets mainly include products such as smartphones, wearable devices, tablets, TVs, and electric cars. We have more products to offer, but there is still room for growth and other products that have not yet been ventured into. In the Chinese market, IoT products account for 50%, but only 20% in overseas markets, which is a huge market. Therefore, we need to establish stronger capabilities to sell products overseas, ensuring that we can control the market. This is crucial for us to establish a secure and efficient overseas market, and will provide insights for future development in various markets.

**Q: In 2023, you made significant investments in research and development. Could you provide more details on your R&D expenditure?**

A: Last year, our R&D expenditure was 19.1 billion RMB, with a compound annual growth rate of 35% over the past few years. **In the future, XIAOMI-W will continue to maintain a relatively high growth rate in R&D investment.** R&D is an important contributor to our profitability, and while I cannot provide specific numbers, we will focus on increasing more R&D investment.

**Q: How do you assess the role of artificial intelligence in enhancing your profitability? Can artificial intelligence bring new profit models to XIAOMI-W? Or do you see artificial intelligence only as a tool to establish a strong competitive advantage for XIAOMI-W, and how do you use it to compete with other market competitors?**

A: Internally at XIAOMI-W, we see this as good news. We will actively utilize artificial intelligence technology in as many scenarios as possible and leverage a large amount of data. I believe that artificial intelligence will be a positive factor for XIAOMI-W, opening up more profit models

**Risk Disclosure and Statement for this article:** [**Dolphin Research Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

### Related Stocks

- [01810.HK - XIAOMI-W](https://longbridge.com/en/quote/01810.HK.md)
- [81810.HK - XIAOMI-WR](https://longbridge.com/en/quote/81810.HK.md)
- [XIACY.US - Xiaomi Corporation](https://longbridge.com/en/quote/XIACY.US.md)

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
