Has Lei Jun's Move Provided Xiaomi with a “Lifesaver”?
Hello everyone, I’m your financial journalist. Today, let’s talk about a recent “highlight” involving Lei Jun: he personally visited the headquarters of Yuzhu Technology and kicked a humanoid robot. The robot stood firm, and Lei Jun gave it a thumbs up.
This might seem like a casual moment of a boss inspecting work, but in my view, it’s actually a “challenge” sent by Xiaomi to the capital market and its competitors at a critical moment.
Why do I say that? Because Lei Jun is more anxious than ever and needs a new story to boost the company’s morale more than ever.
Below, I’ll break down this news into five aspects to explain the logic behind it in plain language.
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Why Did Lei Jun Kick the Robot? – A Signal to Investors
First, let’s clarify why Lei Jun went to Yuzhu Technology. On the surface, he was an investor from Shunwei Capital, checking on the company he invested in (Yuzhu Technology). Yuzhu Technology is very popular right now, with a market value of nearly 200 billion RMB, which is higher than the combined market values of NIO, Xpeng, and Li Auto on the Hong Kong stock market.
However, Lei Jun’s kick was quite strategic:
1. Testing Technological Maturity
What do robots fear the most? Falling and losing stability. By kicking the robot, Lei Jun was testing its “two-legged control” capabilities. If the robot had fallen, it would indicate that the technology was not reliable; if it stood firm, it meant Yuzhu’s core technology (which Xiaomi might rely on in the future) was solid.
2. Sending a Signal of Entering the Market
Lei Jun is the soul of Xiaomi, and his actions often reflect the company’s strategic direction. By experiencing the robot and giving it a thumbs up, he was signaling, “I’m interested in this field; I’m going to get involved.”
3. Calming Anxious Investors
Xiaomi’s stock price has plummeted (from HK$61 to around HK$26), with a market value loss of over one trillion RMB. Investors are worried: Xiaomi can’t sell enough phones, and its car business hasn’t made a profit yet. Lei Jun’s move is telling the market, “Don’t worry; we have a new asset—robots.”
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How Hard Is Xiaomi Right Now? – Facing Double Challenges with Phones and Cars, Urgently Needing a New Driver
Why is Xiaomi in such a hurry to find a new story? Because its two main businesses are facing problems:
1. Phone Business: Stranded by Chips
Xiaomi used to rely on “cost-effectiveness” to sell a large volume of phones at low prices. But now, the cost of memory and storage chips has skyrocketed by 300%!
- Consequence: Half of Xiaomi’s phones sell for less than $200 (about 1,400 RMB), with chips accounting for a significant portion of the cost.
- Solution: Xiaomi had to raise prices to maintain profits, resulting in higher prices and a 26.5% decline in sales volume in the second quarter.
- Current Situation: Previously, sales and prices both increased; now, prices are rising to maintain profits, but sales may decrease even more.
2. Car Business: Revenue Growth Without Profit
Xiaomi’s car business is doing well, with over 700,000 SU7 and YU7 vehicles delivered, and monthly sales at around 30,000 units. Sounds impressive, right?
- Problem: Despite selling cars, there’s no profit. The car business lost 2.6 billion RMB in the second quarter, and the gross profit margin decreased by 7.2 percentage points.
- Reason: Manufacturing cars is a capital-intensive industry with high upfront costs (R&D, factory construction, marketing), and the scale effect hasn’t fully taken effect.
- Current Situation: The car business is still a “cash-consuming” venture.
3. Summary
The phone market is stagnant, and the car market is growing but still losing money. Xiaomi urgently needs a new business that can leverage AI, generate revenue, and support its trillion RMB market value. Humanoid robots meet these criteria.
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Is Xiaomi’s Robot Development “From Scratch” or “Building on Existing Foundations”?
Many think Xiaomi suddenly decided to enter the robotics market, but that’s not the case. Xiaomi’s robotics efforts have been underway for a while, just in a more low-profile manner:
1. Timeline:
- 2020: Internal project initiation.
- 2022: Release of the first “Tie Da” robot, which, although a demonstration model, had a solid technical foundation.
- 2023–2025: Quiet research and development.
- 2026: Rapid progress:
- March: Robots started “interning” in Xiaomi’s car factories, capable of automatically screwing screws with 90% success.
- August: New robots were showcased at the World Robot Conference, capable of picking up snacks, scattering flowers, and shaking hands.
2. Xiaomi’s Advantages:
Xiaomi is not starting from scratch; it’s “reusing” its capabilities from the phone and car businesses:
- Supply Chain Integration: Xiaomi excels at assembling the best components from around the world at the lowest costs. It’s already well-versed in motors, sensors, and batteries for robots.
- Brand Trust: Users trust Xiaomi’s phones and cars, and this trust can be transferred to its robots.
- Diverse Applications: Xiaomi has a range of products (phones, cars, smart home devices), providing more application scenarios for robots.
3. Potential Risks
The robotics market is highly competitive, with companies like Tesla, Huawei, and Xpeng also involved. Xiaomi’s strengths are speed and cost-effectiveness, but its disadvantage is being late to the game. If its technology isn’t successful or costs can’t be reduced, its robots might face similar challenges to other companies.
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What Does the Capital Market Think? – Xiaomi’s Robot Business Is Currently Underestimated
This is a crucial point: When you buy Xiaomi stocks, you’re only getting the phone, IoT (Internet of Things), and car businesses; the robot business is virtually worthless in the valuation.
1. The Secret of Valuation Models
Analysts use the “SOTP” (Segmental Sum of Parts) method to value Xiaomi:
- How much is the phone business worth?
- How much is the IoT business worth?
- How much is the internet service business worth?
- How much is the car business worth?
- Total = Xiaomi’s market value
There’s no consideration for the robot business in this valuation.
2. Comparing with Xpeng:
Xpeng recently separated its robotics business for separate financing, with a valuation of over $6.3 billion (about 43 billion RMB).
- Implication: This shows that the market recognizes robotics as a valuable, independent business, not just an accessory to cars.
- Implication for Xiaomi: If Xiaomi’s robotics business gets the same recognition, its valuation could soar.
3. Xiaomi’s Hidden Value
Xiaomi’s strengths in supply chain, ecosystem, and funding are no less than any car company’s. However, the market hasn’t yet valued these assets. Once Xiaomi’s robots start mass-producing and generating revenue, the capital market will re-evaluate the company, potentially leading to significant stock price gains.
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What’s the Future? – When Will Xiaomi Make Money and See Stock Price Increases?
Let’s talk about the practical question: When will Xiaomi’s robots really start contributing to the company’s success?
1. Short Term (1–2 years): Proof of Concept
- Goal: Establishing the robots in Xiaomi’s own factories and home scenarios.
- Production: Yuzhu Technology expects to produce 10,000–20,000 units in 2026. According to Miaotou, when production reaches 2,000–3,000 units, the capital market will start paying attention and pricing the robots.
- Focus: It’s not about quantity but on the robots’ stability and cost reduction.
2. Medium Term (3–5 years): Commercialization
- Goal: Entering more markets, such as logistics and services.
- Key: Creating a “hardware + service” business model. Selling robots once is a one-time income; providing continuous services (e.g., household help, care) would generate steady cash flow.
3. Advice for Investors:
- Focus on the Story: The potential for the robotics business to boost Xiaomi’s valuation is real and could be a major catalyst for a stock price rebound.
- Realistic Expectations: Turning this potential into profit and cash flow will take time. Don’t expect robots to immediately boost Xiaomi’s profits.
- Be Cautious of Volatility: Yuzhu Technology’s stock price dropped by nearly 60% after its listing, indicating significant volatility in the robotics sector. Xiaomi’s robotics business will likely experience similar fluctuations.
In Summary:
Lei Jun’s move was aimed at Yuzhu Technology, but it actually strengthened Xiaomi’s position. Xiaomi is using robotics as a new strategy to overcome growth challenges in phones and cars. For investors, the robotics business is like a “free” bullish option: if successful, it could double Xiaomi’s valuation; if not, the company’s existing businesses will still provide a safety net.
The opportunity is here; even the smallest company can benefit. This time, Lei Jun aims to take Xiaomi with him into this opportunity. How high they can fly depends on production and commercialization over the next two years.