Xiaomi's R&D investment

Is Xiaomi’s R&D Investment Enough To Break Through?

Let’s first review Xiaomi’s R&D investment in recent years and the proportion of R&D investment and annual growth rate. With these data, you will know that this growth rate is very normal. The data comes from the Xiaomi CDR prospectus and annual financial report.

Xiaomi's R&D investment

R&D investment in 2014 is unknown.

2015: Xiaomi’s R&D investment of 1.512 billion yuan ($0.23 billion) accounted for 2.26%.

2016: Xiaomi’s R&D investment of 2.104 billion yuan ($0.32 billion) accounted for 3.07%, an increase of 32% compared to the previous year.

2017: Xiaomi invested 3.151 billion yuan ($0.49 billion) in R&D, accounting for 3.21%, an increase of 49% compared to the previous year.

2018: Xiaomi invested 5.6 billion yuan ($0.86 billion) in R&D, accounting for 3.22%, an increase of 77% compared to the previous year.

2019: Xiaomi invested 7.7 billion yuan ($1.19 billion) in research and development, accounted for 3.66%, an increase of 36% compared to the previous year.

2020: Xiaomi expects to invest 10 billion yuan ($1.54 billion) in R&D (announced by the founder of Xiaomi, Mr. Lei Jun).

The proportion of R&D investment is temporarily unknown, an increase of about 29% from the previous year.

From the above data, we can see that the annual growth rate of Xiaomi’s R&D investment has basically remained at about 30-40%, which is very stable (except for 2017, which is the year before Xiaomi’s preparations for listing. The S1 chip was released in 2016, and the reason for the substantial increase in research and development costs may also come from this.)

Lei Jun, the founder of Xiaomi, discussed the R&D investment in the 10th anniversary. In this context, it is not uncommon for Xiaomi to increase its R&D investment by 30%-40% in 2021, which is basically a routine operation. Then, based on the growth rate, Xiaomi’s R&D investment in 2021 is roughly between 13 billion and 14 billion yuan ($2 – $2.16 billion), and the proportion of scientific research is expected to remain at about 3.5%, which is relatively stable.

Does Xiaomi Invest Much In R&D?

What is the level of this R&D investment among companies of the same type in the world? Let’s make a horizontal comparison (only list the data for the past two years).

Huawei: Data source: Huawei’s annual report, R&D investment of 131.7 billion yuan ($20.3 billion) in 2019, R&D accounted for 15.3%, an increase of 29.7% compared to 2018.

In 2018, R&D investment was 101.5 billion yuan ($15.65 billion), and R&D accounted for 14.1%, a year-on-year increase of 13.1% compared to 2017. As a company that takes core technology as the foundation of its life, Huawei has spent its money on R&D. Its R&D investment accounts for almost 15% of the annual turnover.

Samsung Electronics: Source Samsung Financial Report. 2019 R&D investment about RMB 117.1 billion ($18.05 billion), accounted for 8.8%, compared to the previous year, an increase of 11%. In 2018, R&D investment was 104.9 billion yuan ($16.17 billion), accounted for 7.7%, an increase of 14% compared to the previous year.

Apple: Source Apple released data. In 2019, R&D investment is estimated to reach $16 billion, accounting for 7.9% of total revenue. The R&D investment in 2018 was approximately $14 billion, accounting for 5.1% of total revenue.

Because VIVO and OPPO are not listed and do not disclose financial data, the specific amount of R&D investment is not known. However, according to official figures, VIVO and OPPO’s R&D investment in the past two years is roughly 10 billion yuan ($1.54 billion) or more.

Xiaomi's R&D investment

Among them, OPPO founder Chen Mingyong once disclosed that OPPO’s research and development expenses in 2019 are about 10 billion yuan. We then calculate the total revenue of OPPO’s smartphone business based on the average price and total sales of OPPO smartphones in 2019 announced by IDC. It is $33.5 billion. In this way, OPPO’s R&D accounted for approximately 4.6%. VIVO should be roughly similar, but its R&D accounted ratio should be slightly higher (because VIVO’s total revenue is not as good as OPPO. So if the R&D investment is similar, the R&D ratio will definitely increase.)


From the above data, we can see that Xiaomi’s overall R&D investment is not particularly outstanding. Especially the proportion of R&D investment is at the bottom of the same type of enterprises. So for Xiaomi, if you want to go to the premium segment, it is necessary to increase R&D investment.

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