Xiaomi 18 Pro starts at 5,999 yuan, up 1,000 yuan from 17 Pro; phone revenue declines as IoT and auto become new growth drivers

Despite mounting cost pressures from a storage supercycle, smartphone makers continue to launch new devices — but their strategies are increasingly tilting toward products beyond phones.

On September 23, Xiaomi unveiled its Mi 18 Pro series, alongside a range of new products including tablets, wearables, and home appliances. This September also saw the debut of Xiaomi's automotive lineup, the Pengcheng series.

Price Hikes of 1,000 Yuan

Under persistent cost inflation, pricing for new smartphones has become one of the most closely watched topics in the market.

According to China Times reports, the starting price of the Mi 18 Pro is 5,999 yuan, 1,000 yuan higher than the Mi 17 Pro. The Mi 18 Pro Max starts at 6,999 yuan, also up 1,000 yuan from its predecessor. The transparent edition (1TB) of these two models starts at 9,999 yuan and 10,999 yuan respectively — marking the return of Xiaomi's transparent design after six years.

The price increases stem from a broad rise in core component costs.

For the SoC chip, the Mi 18 Pro series is the first to feature chips built on TSMC's advanced process. Meanwhile, the continued rise in storage prices remains a major source of cost pressure for smartphone makers. TrendForce estimates that mobile DRAM contract prices will rise 8%–13% quarter-on-quarter in Q3 this year, with a narrower increase expected in Q4. However, Xiaomi Group President Lu Weibing noted at the Q2 earnings call that while the pace of increase has slowed, memory costs remain at historically high levels.

In addition, the growing investment in AI is another factor driving up prices. The Mi 18 Pro series integrates Super Xiaoai 2.0, powered by Xiaomi's MiMo large model. Speaking on the evening of September 23, Lu Weibing said: "From system software to chip hardware, from imaging to large-model applications, the Mi 18 Pro series marks the beginning of Xiaomi's comprehensive AI transformation of smartphones."

Shrinking Market Amid Rising Prices

While new phones are becoming more expensive, the overall smartphone market has contracted significantly. According to IDC, global smartphone shipments in Q2 this year totaled 277.5 million units, down 6.7% year-on-year. Among the top five vendors, only Samsung and Apple saw growth.

Xiaomi's own financial results show that its smartphone revenue in Q2 fell 7.5% year-on-year to 42.1 billion yuan, with shipments of 31.2 million units down 26.5%. Gross margin for the segment dropped 3 percentage points to 8.5%.

Industry insiders told China Times that the 1,000-yuan price increase reflects Xiaomi's passive absorption of cost pressures, while also leaving room for pricing of future standard models. Looking ahead, Omdia Chief Analyst Li Zegang said that smartphone makers will face even greater production pressure in the second half of the year compared to the first half, making the market environment even more challenging.

Growth Beyond Smartphones

With their core business under pressure, smartphone makers are increasingly looking beyond phones. On September 7, Xiaomi's Pengcheng series of electric vehicles was unveiled. On September 23, the company also launched the Mi Pad 9 series, Mi Band 11, Mi Watch S5, and several new home appliances.

In Q2, Xiaomi's IoT and lifestyle products business generated 31.3 billion yuan in revenue, accounting for nearly 30% of total revenue. Its gross margin of 20.1% was 11.6 percentage points higher than that of the smartphone business.

Independent telecom analyst Fu Liang told China Times that major smartphone makers, including Apple, are converging on a similar strategic direction: smartphones alone cannot deliver sufficient returns, so expansion beyond the phone is essential. "With AI empowerment, the path starts from phones to tablets, TVs, and computers with screens, then radiates outward to AI-powered cars, glasses, watches, and other smart terminals — though each company chooses a different entry point."

Watches and bands, as the most worn wearable devices, have become a common entry point for smartphone makers. Driven by the essential need for health monitoring, they serve as key gateways for health strategies. According to IDC, global wrist-worn device shipments in Q2 2026 reached 48.01 million units, down 4.3% year-on-year, with Xiaomi ranking second globally with a 17.7% share.

Home appliances are another key focus for Xiaomi as an important gateway for AI to enter the physical world. On September 23, Xiaomi unveiled multiple new tech home appliances, including TVs, range hoods, smart locks, washing machines, and coffee machines.

However, the domestic home appliance market is already in a phase of stock competition. According to Aowei Cloud Network data, China's home appliance market faced pressure in 2026, with first-half retail sales of 425 billion yuan, down 9.9% year-on-year.

Overseas expansion has become a key priority for home appliance makers in recent years. Multiple industry executives told China Times that while the domestic market remains sluggish, growth is primarily driven by overseas markets. Xiaomi's Q2 earnings report noted that its overseas IoT and lifestyle products revenue grew rapidly year-on-year, driven by expanded channel coverage and product categories. Overseas tablet shipments and revenue both reached record highs in the quarter.

Lu Weibing also said at the Q2 earnings call that Xiaomi's IoT business grew over 20% year-on-year in Q2, and overseas IoT revenue hit a record high in the first half of the year. However, he noted that the share of large home appliances in overseas markets remains very low.

Speaking on overseas expansion, Lu added that Xiaomi's international push focuses on two major categories: large home appliances, which are still in a pilot phase but are now entering full-scale global expansion, and automotive. He revealed that Xiaomi has recently conducted market research in several countries for its automotive business, and he plans to visit European markets for further research.

A New Triangle: Phones Hold, IoT Fills, EV Scales

With smartphones holding the fort, IoT filling the gaps, and electric vehicles scaling up, Xiaomi's "new triangle" is rebalancing its strategic priorities.

(Source: China Times)