At the end of 2021, Xiaomi declared for the first time that it would benchmark itself against Apple, learning from its rival’s approach. Five years later, with the launch of the Xiaomi 17 series, the company has brought its product line into alignment with Apple’s.
The Xiaomi 17 starts at RMB 4,499 (USD 629.9), maintaining the same entry-level pricing as last year’s Xiaomi 15. Higher-end configurations, however, are priced RMB 200–500 (USD 28–70) higher than the previous generation.
Over more than a decade of iterations, Xiaomi has moved from budget-friendly to premium. Its smartphone prices have risen steadily, outpacing Apple’s increases in the same period. Apple, by contrast, has largely pursued a strategy of offering more, while keeping prices the same, in recent years.
Price hikes outpace Apple
Xiaomi first raised prices with the Xiaomi 6, which climbed 15%. Each subsequent flagship release followed suit, with annual increases typically above 10%. The Xiaomi 8 rose 17.4%, while the Xiaomi 9 went up 11.1%.
The sharpest change came in 2020, when the Xiaomi 10 marked the company’s entry into the high end. Its starting price jumped from RMB 2,999 (USD 419.9) to RMB 3,999 (USD 559.9), an increase of RMB 1,000 (USD 140), or more than 30%. That was Xiaomi’s largest single-year adjustment.
For the next three years, Xiaomi kept flagship pricing anchored at RMB 3,999. Last year, the Xiaomi 15 lifted the baseline by 12.5% to RMB 4,499, a level maintained with the Xiaomi 17. This placed the company firmly in the RMB 4,000–5,000 (USD 560–700) segment.
Apple has been more restrained. In 2017, the year Xiaomi’s 15% hike debuted, the iPhone 8 rose just 9.3%. Aside from the iPhone X anniversary edition, which commanded a premium, Apple largely stabilized its pricing. The iPhone 12 started at RMB 6,299 (USD 879.9), while the iPhone 13 dropped to RMB 5,999 (USD 839.9) and has remained there since.
The contrast is clear. Xiaomi’s price hikes have consistently outpaced Apple’s, even as Apple pursued modest upgrades without major jumps. The gap between the entry-level iPhone and Xiaomi’s flagship has narrowed from nearly RMB 3,000 (USD 420) in 2011, when the iPhone 4S launched at RMB 4,988 (USD 698.3) against the Xiaomi 1 at RMB 1,999 (USD 279.9), to just RMB 1,500 (USD 210) today.
Xiaomi and Apple go head-to-head
Each major price increase has been followed by short-term dips in sales.
When the Xiaomi 10 launched in 2020, the company’s shipments fell 35% in the second quarter, pushing it to fifth place in the Chinese market. Overseas, where India accounts for nearly half of Xiaomi’s international revenue, shipments were nearly cut in half, according to Canalys.
Xiaomi faced a similar downturn in 2016, when annual shipments dropped 36% year-on-year, reducing its market share from 15.1% to 8.9%, according to IDC. That slump prompted founder Lei Jun to launch the higher-priced Xiaomi 6 in 2017. The device was well received, but supply chain constraints capped shipments at 5.5 million units.
Over time, however, rising prices have not derailed Xiaomi’s broader sales. Volumes have trended upward as the company moved into the premium segment. The Xiaomi 14 is expected to sell 8.8–12 million units over its lifecycle, while the Xiaomi 15 sold nearly two million units within just two months of launch.
By the second quarter of 2021, Xiaomi’s second year of pushing high-end devices, Canalys data showed it had overtaken Apple in global smartphone shipments, ranking second worldwide.
More importantly, the premium strategy has delivered higher margins. When Lei pledged in 2018 that the company’s hardware net margin would not exceed 5%, smartphone gross margins were around 2%. By 2016, they had risen to 3.45%. After the pivot to high-end models, margins broke into double digits in 2021 and have remained around 12% for the past three years.
Apple remains far ahead, with hardware margins consistently in the 30–40% range, the highest in the industry. But this year, the launch of the iPhone 17 may reshape the battlefield.
For years, Apple sustained its margins by offering incremental upgrades. But as its market share in China has slipped, the iPhone 17 signals a willingness to trade margin for market share. With both firms now competing in the same price band, their rivalry has never been closer.
Valuation and smartphones are decoupling
Xiaomi’s valuation story is shifting. Historically, its market cap was closely tied to the profitability of its smartphone business. High margins were seen as proof of a successful premium push, lifting investor confidence, while weak margins signaled competitive pressure and weighed on the stock.
During the Xiaomi 10 era, the company’s high-end pivot lifted its share price from around HKD 10–11 (USD 1.3–1.4) in early 2020 to HKD 30 (USD 3.9) by year’s end, nearly tripling its market cap. The Xiaomi 11 extended the momentum, pushing the stock to a record HKD 35.9 (USD 4.6) in January 2021, with market value surpassing HKD 900 billion (USD 115.7 billion).
By 2025, that link is weakening. Despite a decline in smartphone gross margins in the latest interim report, Xiaomi’s stock has risen more than 50% year-to-date, supported by record adjusted quarterly profit of RMB 10.83 billion (USD 1.5 billion).
The shift is driven by the rapid growth of Xiaomi’s electric vehicle business. Beyond revenue, the unit’s gross margin of 26.4%, up 3.3 percentage points quarter-on-quarter, now exceeds smartphones and is approaching the company’s overall 22.5% margin.
As a result, smartphones are no longer the primary driver of Xiaomi’s valuation. They remain an important measure of performance, but short-term volatility is now tolerated by investors. Instead, the EV unit’s growth trajectory and share of the booming market have become the main catalysts. Capital markets are increasingly applying the valuation models of new energy companies to reassess Xiaomi.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Song Wanxin for 36Kr.