Xiaomi’s Credit Outlook Improves Amid Strong Diversification and EV Push
Fitch Ratings has revised Xiaomi Corporation’s credit outlook to Positive from Stable, reaffirming its Long Term Issuer Default Rating (IDR) at ‘BBB’. This upgraded outlook reflects Xiaomi’s robust performance across its core electronics segments and the promising initial results from its foray into the electric vehicle (EV) market. The affirmation of the ‘BBB’ rating, initially assigned in April 2020 and consistently affirmed since, underscores the company’s sustained financial health and strategic execution [fitchratings.com](https://www.fitchratings.com/entity/xiaomi-corporation-96674716).
The positive shift in outlook is also mirrored by S&P Global Ratings, which upgraded Xiaomi’s rating to ‘BBB’ from ‘BBB-‘, citing strong performance in consumer electronics and the anticipated contribution from its EV ventures. S&P projects Xiaomi’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach between 37 billion and 40 billion yuan by 2025, signaling increased market dominance and financial stability [finimize.com](https://finimize.com/content/xiaomis-ratings-upgraded-amid-strong-growth-in-electronics-and-evs).
Strong Financial Performance in Key Segments
Xiaomi reported a record-setting annual performance in 2024, with total revenue escalating by 35.0% year-over-year (YoY) to RMB365.9 billion. Adjusted net profit also saw a significant rise of 41.3% YoY, reaching RMB27.2 billion. The fourth quarter of 2024 marked a milestone, with quarterly revenue exceeding RMB100 billion for the first time, reaching RMB109.0 billion—a 48.8% increase YoY—and adjusted net profit surging by 69.4% to RMB8.3 billion [apac-business.com](https://www.apac-business.com/companies/financial-results/xiaomi-reports-record-annual-performance-with-revenue-reaching-rmb365-9-billion-in-2024-tops-rmb100-billion-in-quarterly-revenue-for-the-first-time-in-q4/).
This growth was broad-based, with all business segments experiencing high growth, driven by the “Human x Car x Home” smart ecosystem strategy. Smartphone revenue grew by 21.8% to RMB191.8 billion, with global smartphone shipments increasing by 15.7% to 168.5 million units. Canalys data indicates Xiaomi maintained its position among the top three global smartphone vendors for 18 consecutive quarters, holding a 13.8% market share in 2024. The company also made significant inroads into the premium smartphone market, with its market share in the RMB4,000 to RMB5,000 segment rising to 24.3%, securing the top spot [apac-business.com](https://www.apac-business.com/companies/financial-results/xiaomi-reports-record-annual-performance-with-revenue-reaching-rmb365-9-billion-in-2024-tops-rmb100-billion-in-quarterly-revenue-for-the-first-time-in-q4/).
Electric Vehicle Ambitions Drive Diversification
Xiaomi’s strategic entry into the electric vehicle market with the Xiaomi SU7 Series has garnered significant attention and contributed to its positive outlook. While the EV business is currently considered loss-making, Fitch analysts noted that the strong performance of Xiaomi’s core segments is expected to offset these initial losses [hk.marketscreener.com](https://hk.marketscreener.com/quote/stock/XIAOMI-CORPORATION-45271958/news/Strong-Performance-in-Xiaomi-s-Core-Segments-to-Offset-Loss-Making-EV-Business-Fitch-Says-47739354/). Revenue from smart EV and other new initiatives reached RMB32.8 billion in 2024, with RMB16.7 billion generated in Q4. The company delivered 136,854 vehicles within nine months of its launch, exceeding its full-year target ahead of schedule. The subsequent launch of the ultra-premium Xiaomi SU7 Ultra further underscores its ambition, with pre-orders exceeding 19,000 units and locked-in orders surpassing 10,000 units within the first three days post-launch. Xiaomi aims to deliver 350,000 EV units in 2025 [apac-business.com](https://www.apac-business.com/companies/financial-results/xiaomi-reports-record-annual-performance-with-revenue-reaching-rmb365-9-billion-in-2024-tops-rmb100-billion-in-quarterly-revenue-for-the-first-time-in-q4/).
This aggressive expansion into EVs aligns with a global trend of technology firms venturing into sustainable mobility, diversifying their business models and targeting new growth opportunities. The capital expenditure and R&D investments in the EV segment are expected to impact free operating cash flow in the short term, but analysts view this as a strategic move for long-term profitability and market positioning [finimize.com](https://finimize.com/content/xiaomis-ratings-upgraded-amid-strong-growth-in-electronics-and-evs).
IoT and Internet Services Bolster Ecosystem
Beyond smartphones and EVs, Xiaomi’s Internet of Things (IoT) and lifestyle products business achieved a new milestone, generatings over RMB100 billion in revenue for the first time in 2024, and recording a gross profit margin of 20.3%. The smart large home appliance category saw substantial growth, with revenue surging by 56.4% YoY. Shipments of air conditioners, refrigerators, and washing machines reached record highs, indicating strong consumer adoption of Xiaomi’s integrated smart home ecosystem [apac-business.com](https://www.apac-business.com/companies/financial-results/xiaomi-reports-record-annual-performance-with-revenue-reaching-rmb365-9-billion-in-2024-tops-rmb100-billion-in-quarterly-revenue-for-the-first-time-in-q4/).
The internet services segment also demonstrated robust growth, with revenue increasing by 13.3% YoY to RMB34.1 billion and a high gross profit margin of 76.6%. The global monthly active users (MAU) for Xiaomi’s internet services surpassed 700 million in December 2024, marking a 9.5% YoY increase. In mainland China, MAU reached 172.9 million, growing by 11.1% YoY. These figures highlight the expanding reach and engagement of Xiaomi’s digital ecosystem, further diversifying its revenue streams and strengthening its overall market position. For more insights on the burgeoning tech ecosystem in Asia, read more on Globally Pulse Business.
Strategic R&D and AI Integration
Xiaomi’s breakthroughs are underpinned by substantial investments in research and development (R&D). In 2024, R&D expenses increased by 25.9% YoY to RMB24.1 billion, and the company’s R&D personnel grew to 21,190. By the end of 2024, Xiaomi held over 42,000 patents globally, including more than 1,000 in EV-related technologies. This commitment to innovation is crucial for its premiumization strategy across product categories [apac-business.com](https://www.apac-business.com/companies/financial-results/xiaomi-reports-record-annual-performance-with-revenue-reaching-rmb365-9-billion-in-2024-tops-rmb100-billion-in-quarterly-revenue-for-the-first-time-in-q4/).
Artificial intelligence (AI) is a foundational technology for Xiaomi, with continuous investments in this area. The introduction of Xiaomi HyperOS 2 in October 2024, featuring HyperCore, HyperConnect, and HyperAI, aims to enhance cross-device smart connectivity and AI functions. The integration of AI into its smart EVs, smartphones, and smart home devices is a key enabler of Xiaomi’s “Human × Car × Home” strategy, positioning the company for continued high growth in these critical markets.
