How Xiaomi Executives Addressed Memory Risks, AIoT, Electric Vehicles, R&D Planning... Read This Article to Understand Their Remarks at the Goldman Sachs Conference

Xiaomi is making the increase of average smartphone selling prices its primary operational focus for 2026, while significantly ramping up investment in artificial intelligence to transform all business lines. It has also set an annual EV delivery target of 550,000 units. As the world's third-largest smartphone brand, Xiaomi is driving multi-year expansion through its "Human × Car × Home" ecosystem strategy.

On January 7, according to Wind Chasing Trading Desk, Goldman Sachs released a new research report, stating that it held its China Auto Executive Outlook teleconference on January 5–6, 2026, during which Xiaomi executives revealed the latest strategic plans for the smartphone, AIoT, and smart EV segments.

According to the report, Xiaomi’s head of investor relations and senior manager stated on the call that Xiaomi is carrying out an extremely aggressive but well-defined capital expenditure plan (R&D budget of up to RMB 200 billion for 2026–2030), aiming to integrate the "Human × Car × Home" ecosystem through foundational technologies (in-house chips, large AI models).

The report noted that Xiaomi executives said that, although facing short-term macro headwinds due to surging memory chip costs, management is seeking to mitigate risks through premiumization, price increases, and supply chain management. Meanwhile, the AIoT division is targeting growth, planning to expand stores to over 1,000 locations, and sees overseas AIoT business as a future growth engine.

Goldman Sachs stated that Xiaomi executives emphasized that the most critical catalyst lies in the scale effect of the EV business (2026 delivery target raised to 550,000 units) and the potential for in-house chip development to supplant external suppliers (such as NVIDIA).

Goldman Sachs maintains a "Buy" rating on Xiaomi, with a target price of HKD 53.5, offering nearly 40% upside from the current price of HKD 38.18.

Smartphone Business: Price Hikes to Counter Cost Tsunami, Premiumization as the Only Way Forward

The report said that, facing industry-wide shortages and surging costs of memory chips, Xiaomi’s strategy is no longer purely defensive; instead, it is transferring the pressure by raising average selling prices (ASP).

First, Xiaomi executives stated that the top operational focus for 2026 is increasing the average selling price of its smartphones. The method is simple but effective: price hikes. For example, the upcoming Xiaomi 17 Ultra will be priced RMB 500–700 higher than the Xiaomi 15 Ultra.

With rising memory prices, Xiaomi executives admitted that the current upcycle in memory prices is "unprecedented." The price uptrend is expected to persist in the first half of 2026 and might slow in the second half, but given the explosive AI demand, the outlook for 2027 is still unclear.

Xiaomi executives stated that, compared with pure smartphone OEMs, Xiaomi’s strengths lie in its massive order volume and diversified business structure. If mid-term memory costs normalize, gross margins (GPM) will have substantial room to improve.

Additionally, Xiaomi executives emphasized that the Chinese market is highly strategic for Xiaomi and is the starting point of its premiumization strategy. The company’s goal is to increase market share by one percentage point annually in China.

AIoT: The “Ballast Stone” of Profits, Going Global as Growth Engine

The report said that the AIoT segment, alongside internet services, is positioned as the profit stabilizer for Xiaomi. Building on about 20% year-on-year revenue growth and a 2–2.5 percentage point gross margin expansion in 2025, Xiaomi executives expect 2026 growth to be driven by government electronics and appliance subsidies, as well as overseas expansion.

The company aims to expand its Xiaomi Home stores from about 500 in 2025 to over 1,000 in 2026, while diversifying product categories and exploring partnerships with cross-border e-commerce platforms like AliExpress. Management pointed out that, currently, overseas AIoT revenue accounts for about 30% (as of Q3 2025), while overseas smartphone revenue has reached 60%; the latter is seen as a reference target for the long-term overseas expansion potential of AIoT.

By product type, large appliances account for about 20% or more of revenue, and have been strategic since 2023; TVs and PCs about 15–20%; tablets about 15%; wearables roughly 10%; with the remainder contributed by a wide range of ecosystem products.

The company plans to maintain 2026 gross margins at no less than 2025 levels by trimming low-margin product categories, increasing in-house developed products, and avoiding aggressive discounting.

Smart EVs: Aggressive Delivery Target Raised to 550,000 Units, Third Model the Deciding Factor

Goldman Sachs stated that Xiaomi Auto’s production ramp-up has exceeded market expectations. Xiaomi has announced a 2026 delivery target of 550,000 vehicles, a substantial increase from the over 410,000 units forecast for 2025 (well above the initial 300,000 target set in January, and the revised 350,000 and 400,000 targets set in March and at year-end).

Xiaomi executives said the growth momentum stems from improved manufacturing capacity on the supply side, and confidence in demand for the SU7 facelift (scheduled delivery in first half 2026) and the third all-new model based on a new platform (delivery in the second half).

With manufacturing capacity coming in line, the company will step up consumer incentives and marketing efforts. The third model will target a distinct user group from SU7/YU7, and management is highly confident in its success.

Management believes that a healthy gross margin for smart EVs is 20% or higher, achievable via supply chain management, the blockbuster product approach, and highly efficient new retail channels. However, gross margin in 2026 may be lower than 2025, due to:

Impact from purchase tax subsidies (Xiaomi will provide up to RMB 15,000 purchase tax subsidy for orders locked before November 30, 2025 and delivered in 2026), and a decrease in the proportion of SU7 Ultra deliveries.

The report noted that Xiaomi reiterated its focus on the premium auto market, based on the fact that models above RMB 150,000 account for 50% of China’s annual sales of 20 million passenger cars, but represent 80–90% of industry-wide profits. Premium EVs drive Xiaomi’s brand upmarket and support its long-term goal of becoming one of the global top five auto platforms in 15–20 years. The company plans to start exporting EVs to Europe in 2027, viewing Europe as a unified, premium market.

R&D Investment: AI, Assisted Driving, and Chips Advancing in Three Directions

Goldman Sachs said Xiaomi executives stated on the call that the company is committed to investing RMB 200 billion in R&D from 2026–2030, with main focus on AI, intelligent driving, and chip development.

AI investment accounts for about 25% of Xiaomi’s RMB 32–33 billion R&D spending for 2025, i.e., RMB 8 billion. While the company plans to increase AI spending in 2026, management intends to keep it at a reasonable level and believes current computational resources are sufficient.

Xiaomi aims to use AI to empower its ecosystem (as the only smartphone brand with its own foundational large model) and internal operations (with 30% of code generated by AI), rather than sell AI capabilities to third parties.

For assisted driving, Xiaomi has 1,800 professionals, and the enhanced HAD (hyper automated driving) released in November 2025 incorporates reinforcement learning and a world model on top of the June version trained on 10 million video clips.

By 2025, 91.26% of Xiaomi EV users are active users of assisted driving features. The company plans to release VLA assisted driving in 2026, and to obtain an L3-level autonomous driving road test license in Beijing by the end of 2025.

In terms of chip investment, Xiaomi announced a RMB 50 billion investment over ten years starting from 2021, with RMB 13.5 billion spent over the past four years on XRING O1 chip development.

With the launch of the in-house XRING O1 chip in mid-2025, the company will have 3nm SoC design capabilities, and is confident about in-house intelligent EV chip development (compared to the NVIDIA DRIVE AGX Thor chip currently in the YU7).

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The above content is from Wind Chasing Trading Desk.

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