Xiaomi Segment Profit Margin: Smartphone x AIoT

Devices. Pixabay Image.

This article presents Xiaomi’s profit margin breakdown within the Smartphone x AIoT segment.

You may find more information about the top-level profit share and profit margin of the Smartphone × AIoT segment in this page: Xiaomi profitability breakdown: Smartphone, EV, and AI.

For your information, Xiaomi’s Smartphone × AIoT segment consists of several revenue categories, including Smartphones, IoT & Lifestyle Products, Internet services, and others.

Investors interested in how Xiaomi generates revenue from these categories may find more resources here: Smartphone x AIoT.

Let’s look at the results!

For other statistics of Xiaomi, you may find more information on this page: Xiaomi key stats.

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Smartphone x AIoT:

• Revenues from smartphones are derived from the sale of smartphones.

• Revenues from the IoT and lifestyle products primarily comprise revenues from sales of smart large home appliances, smart TVs, tablets, wearables and other IoT and lifestyle products.

• Revenues from internet services are derived from advertising services and internet value-added services (including online game and fintech business).

• Other related businesses revenues primarily comprise revenue from the hardware repairment services for products, installation services for certain IoT products and sale of materials.

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Insight & Summary of Xiaomi’s Profitability Breakdown within the Smartphone x AIoT Segment

The following analysis consolidates the trends observed across Xiaomi’s Smartphone × AIoT segment gross profit margin for the 2017–2025 period.

• Total Segment Gross Profit: From ¥15B to ¥76B Total gross profit for the Smartphone × AIoT segment expanded from ¥15,154M (FY2017) to ¥76,042M (FY2025), a fivefold increase over eight years, with a total gross margin improvement from 13.2% to 21.7%. The FY2023–FY2025 average of ¥68,009M at 21.4% blended margin reflects a structurally improved earnings quality compared to the segment’s hardware-dominant origins. The trajectory was not linear — the FY2022 contraction (-18.3% total GP) following smartphone volume collapse was a sharp reminder of the segment’s hardware sensitivity — but the recovery from that trough was complete and then extended.

• Internet Services: The Structural Earnings Engine Internet services has been the most consistent and highest-quality earnings contributor throughout the dataset. With gross margins ranging from 60.2% (FY2017) to 76.6% (FY2024) and stabilising at ~75–76% in the most recent three years, internet services is approximately 3–7x more margin-accretive per revenue dollar than any hardware component.

  Despite contributing only ~10–11% of total segment revenue, internet services accounted for 37.7% of gross profit mix in FY2025 and 37.9% on a FY2023–FY2025 average basis — the single largest gross profit contributor in the segment. The absolute GP grew from ¥5,961M (FY2017) to ¥28,640M (FY2025), roughly doubling in the most recent four years, driven by advertising revenue scale, a growing fintech contribution, and MIUI monetisation density improvements across a larger global MAU base.

• IoT & Lifestyle: The Transformation Story of the Dataset IoT & Lifestyle Products is the single most important structural development in Xiaomi’s gross profit composition over the period. Starting at a 8.3% gross margin in FY2017 — barely above the smartphone hardware floor — IoT margin has expanded to 23.1% in FY2025, a 14.8 percentage point structural improvement that reflects the compounding effect of Xiaomi’s ecosystem strategy: higher-value IoT products (robot vacuums, air purifiers, smart appliances), scale-driven manufacturing cost reduction, and increasing attach rates of branded premium SKUs versus entry-level connected hardware.

  The gross profit contribution expanded from ¥1,951M (FY2017) to ¥28,423M (FY2025), with a FY2023–FY2025 growth average of 36.6% — by far the fastest-growing gross profit component in the segment. In FY2025, IoT gross profit (¥28,423M) reached effective parity with internet services gross profit (¥28,640M), a crossover that defines the next phase of Xiaomi’s earnings model: two complementary high-growth profit engines instead of one. The IoT GP mix expanded from 12.9% (FY2017) to 37.4% (FY2025), completing a rebalancing away from smartphone hardware dominance that is now structurally locked in.

• Smartphones: Volume Leverage, Margin Volatility Smartphone gross profit peaked at ¥24,861M (FY2021) alongside record shipments, declined sharply in FY2022 (-39.8%), recovered in FY2023 (+53.5%), and has since contracted: ¥24,254M (FY2024) and ¥20,266M (FY2025). The FY2025 decline of -16.4% occurred despite relatively stable ASP (¥1,129) and modest volume decline (165.2M vs 168.5M units), suggesting margin compression at the gross profit level independent of volume — consistent with higher component costs or a mix shift toward lower-margin SKUs and markets.

  Smartphone margin reached a recent peak of 14.6% (FY2023) and has since declined to 10.9% (FY2025), approaching the FY2018 trough of 6.2%. The FY2023–FY2025 margin average of 12.7% is moderate by global smartphone standards and confirms that Xiaomi’s smartphone business — despite ASP improvement — has not achieved premium-tier margin characteristics. The GP mix declined from 40.0% (FY2023) to 26.7% (FY2025), with smartphone contribution dropping below IoT for the first time in the segment’s history.

• Structural Takeaway: The gross profit mix transformation from FY2017 to FY2025 is stark: smartphones declined from 46.9% to 26.7%, Others is negative, while IoT (12.9% → 37.4%) and internet services maintained their ~37–39% share on a growing base. The result is a blended total margin that improved from 13.2% to 21.7% — 8.5 percentage points over eight years — almost entirely driven by IoT margin expansion and internet services scale.

  The convergence of IoT and internet services as co-equal gross profit contributors at ~¥28–29B each in FY2025, combined with the declining smartphone gross profit share, confirms that Xiaomi has successfully executed a strategic shift from hardware-dominant to ecosystem-driven gross profit economics. The FY2023–FY2025 average gross margin of 21.4% is not the endpoint — continued IoT margin expansion (currently at 23.1% and rising) and internet services monetisation density improvement suggest a trajectory toward 24–26% blended segment margins as the two highest-quality components grow disproportionately faster than smartphones.

The table below combines all key Xiaomi’s Smartphone x AIoT profitability metrics into a single view for the latest three fiscal years.

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Xiaomi’s Profit from All Categories within the Smartphone × AIoT Segment (RMB¥)

Investors interested in how Xiaomi generates revenue from these categories may find more resources here: Smartphone x AIoT.

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Xiaomi’s Profit from All Categories within the Smartphone × AIoT Segment (USD$)

Investors interested in how Xiaomi generates revenue from these categories may find more resources here: Smartphone x AIoT.

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Xiaomi’s Profit Mix from All Categories within the Smartphone × AIoT Segment

Investors interested in how Xiaomi generates revenue from these categories may find more resources here: Smartphone x AIoT.

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Xiaomi’s Profit Growth from All Categories within the Smartphone × AIoT Segment

Investors interested in how Xiaomi generates revenue from these categories may find more resources here: Smartphone x AIoT.

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Xiaomi’s Profit Margin from All Categories within the Smartphone × AIoT Segment

Investors interested in how Xiaomi generates revenue from these categories may find more resources here: Smartphone x AIoT.

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Credits And References

1. All data presented in this article were obtained and referenced from Xiaomi’s quarterly and annual reports published on the company’s IR: Xiaomi Investor Relations.

2. Pixabay Images.

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Disclosure

We may use artificial intelligence (AI) tools to assist us in writing some of the text in this article. However, the data is directly obtained from original sources (usually the quarterly and annual reports) and meticulously cross-checked by our editors multiple times to ensure its accuracy and reliability.

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