Xiaomi ‘in no rush’ to turn vast AI spending into profits despite earnings slump

Chinese technology giant Xiaomi said it is “in no rush” to convert its substantial artificial-intelligence investment into profit after reporting further deterioration in second-quarter earnings. Revenue for April-June fell 6.1 per cent year on year to 108.9 billion yuan, while net profit declined 20.3 per cent year on year to 9.46 billion yuan. The drop marked the third consecutive quarter of net-profit contraction, amid intense competition and cost inflation. Research and development spending rose 25.6 per cent year on year in the first half to 18.2 billion yuan (US$2.7 billion). AI-related investment accounted for nearly 30 per cent of the total, underscoring Xiaomi’s commitment even as the timing and scale of potential returns remain uncertain. “Our investment in AI is currently still in a phase of large-scale input,” Alain Lam, Xiaomi’s vice-president and chief financial officer, said during Tuesday evening’s earnings call. “As a large corporation, Xiaomi is in no rush to pursue immediate monetisation.” The approach mirrors a wider debate among technology companies in China and the United States, where rising AI capital expenditure is accompanied by investor concerns over whether spending will generate adequate returns. Lu Weibing, Xiaomi’s partner and president, said memory prices remained high and competition fierce, but short-term pressure would not alter the company’s long-term strategy. For investors, Xiaomi’s decision preserves flexibility to build AI capabilities but increases exposure to sustained research costs, component inflation and uncertain payback. Its smartphone and electric-vehicle operations also remain exposed to intense consumer-market competition.