64% YoY Revenue growth

According to its official website, Xiaomi Corporation realized record high total revenue and profit in the Q2 of 2021. Xiaomi is a consumer electronics and smart manufacturing company with smartphones and smart hardware. In addition, these hardware is connected by an Internet of Things (IoT) platform.

In the second quarter of 2021, Xiaomi’s total revenue amounted to RMB87.8 billion. As of August 26th, 2021, 1RMB is equal to 0.15USD so that sales revenue was almost 13.17billin USD. This number is 64% year-over-year growth, in fact.

What’s more, adjusted net profit for the period was RMB6.3 billion (0.945billion USD), an increase of 87.4% year-over-year. Total revenue and adjusted net profit both reached record highs in the quarter. Thus, these results showed the excellence of the business model and the robustness of its operations.

Autonomous Driving

In the week of August 23rd 2021, Xiaomi acquired an autonomous driving start-up, DeepMotion. It means that the company wants to diversify its business beyond smartphones, even though it realized record high growth. In fact, smartphones accounted for 67.3% of total revenue of the company. However, it tries to reduce its reliance on mobile phones by entering into other internet-connected device businesses. For example, the company thinks of electric vehicles as a new revenue source.

The purpose of the acquisition was to enhance the technological competitiveness of Xiaomi’s electric vehicle business. In fact, Xiaomi announced plans to launch an electric vehicle business and invest $10 billion over the next 10 years.

Autonomous driving will be a competitive feature in electric vehicles. There are so many competitors relating EVs and autonomous driving, which are Baidu, Waymo and Tesla. Therefore, Xiaomi tries to enhance its capabilities in the EV market as soon as possible through the acquisition. This is because the Chinese company decided to enter the market later than competitors did.

Who is DeepMotion?

DeepMotion is an autonomous driving solution provider based in China. Its prodcuts include DeepMotion Client, an intelligent advanced driver assistance systems (ADAS) device, provides ADAS functions. They include lane departure warning, pedestrian detection, collision warning, and perform localization at 10cm accuracy. In addition, DeepMotion Cloud receives and fuses billions of observations from the crowdsourced DM-100s into a consistent 3D semantic maps.

Other than smartphones

We can see good news relating Xiaomi in 2021. They are record high growth and it became 2nd largest smartphone maker in the Q2 of 2021. The trade war is changing the landscape of the smartphone industry drastically. For example, Huawei, which was former 2nd largest smartphone manufacturer, is out of top 5 now. On the other hand, its former youth brand, HONOR, is reviving thanks to its own new brands. Xiaomi increases its presence on the market and it leads to the good result.

However, the smartphone market is matured already and this is one reason why LG withdrew it. It implies that reliance on smartphone is not good in the long term. Thus, it is better for many companies to earn cash in the existing businesses and invest it in new businesses. This business theory becomes more important nowadays. This is because business environment is changing faster than before and there is no guarantee to keep profits in the existing businesses.

When it comes to Xiaomi, existing business is smartphone and new business is EV. Therefore, we can expect that the Chinese company will acquire more companies to improve its technologies relating to EVs.