Xiaomi ‘in no rush’ to turn vast AI spending into profits despite earnings slump

The Chinese tech firm has seen its net profits decline for three consecutive quarters, as it rapidly ramps up AI-related R&D spending

Chinese technology giant Xiaomi has said it is “in no rush” to convert its large investments in artificial intelligence into profit, after recording another decline in net profits in the second quarter amid intense competition and cost inflation.

“Our investment in AI is currently still in a phase of large-scale input. However, as a large corporation, Xiaomi is in no rush to pursue immediate monetisation,” said Alain Lam, the firm’s vice-president and chief financial officer, during an earnings call on Tuesday evening.

The comment comes as tech firms in China and the United States ramp up capital expenditure to power their AI development, even as market concerns rise over whether the investments will generate sufficient returns.

In the first half of the year, Xiaomi’s spending on research and development jumped 25.6 per cent year on year to 18.2 billion yuan (US$2.7 billion), with AI-related inputs accounting for nearly 30 per cent of the total, Lam said on Tuesday.

“The prices of memory are still high and the competition remains fierce. But the short-term pressure will not change our strategy for the long run,” said Lu Weibing, partner and president of Xiaomi, during the call.