Lei Jun has always wanted to remove the label of "assembly factory" from Xiaomi.
Can Lei Jun finally untangle some of his knots?
Image source: Lei Jun's Weibo
On October 28th, the Xiaomi Wuhan Smart Home Appliance Factory was officially put into operation. The production capacity of the first - phase project is mainly for air - conditioning products. This is the third large - scale smart factory built by Xiaomi, following the Xiaomi Smartphone Smart Factory in Changping, Beijing, and the Xiaomi Automobile Super Factory in Yizhuang, Beijing.
According to public information, the Xiaomi Smart Home Appliance Factory in Wuhan covers an area of 500,000 square meters. It has six core air - conditioning sub - factories, an experimental building, a finished - product logistics warehouse and other supporting facilities, achieving full digitalization and intelligence in production, information, and equipment. The first - phase investment in the factory was 2.5 billion yuan, achieving an astonishing production start - up speed of 336 days. The planned peak annual production capacity can reach 7 million sets.
The "War of Words" over Xiaomi Air - Conditioners
As Xiaomi's first self - built smart home appliance factory and Lei Jun's contribution to the development of his hometown through industrial investment, both he and Lu Weibing, the president of Xiaomi, were present at the scene to witness the commissioning ceremony, indicating their high level of attention.
During his speech, Lu Weibing emphasized that Xiaomi has formed a complete industrial closed - loop of "design, R & D, production, and verification" in Wuhan, with the establishment of an R & D center, an experimental center, and a manufacturing center. Wuhan is the home base of Xiaomi's "home" ecosystem. In the future, the Xiaomi Smart Home Appliance Factory will become the core manufacturing hub for Xiaomi's large home appliances and will be built into a benchmark smart factory for intelligent manufacturing.
Although Lei Jun didn't give a speech, his face showed a relaxed expression.
After the event, he said on Weibo that Xiaomi had taken a big step forward in the field of intelligent manufacturing. The Xiaomi Smart Home Appliance Factory can produce a high - end air - conditioner every 6.5 seconds, and 100% AI visual quality inspection can be carried out on key components. The "Xiaomi Surge Intelligent Manufacturing Platform" enables intelligent control of manufacturing equipment, reaching the top - level standards in the industry in terms of both efficiency and quality.
Image source: Lei Jun's Weibo
This means that Xiaomi's "full ecosystem of cars, homes, and people" strategy has filled another piece of the puzzle, completing the closed - loop in large - scale self - built smart factories.
In fact, before the commissioning of this smart factory, Xiaomi's air - conditioning products were involved in a war of words. In August this year, a controversy about "Xiaomi's online air - conditioner sales surpassing Gree's" erupted on social platforms. Lu Weibing, the president of Xiaomi, Wang Hua, the general manager of Xiaomi's public relations department, and Zhu Lei, the marketing director of Gree, took turns to argue about "who is really leading" for several rounds. Wang Hua even wrote a doggerel to "tease".
On the surface, this is a "ranking battle" caused by differences in statistical caliber. In fact, it is the shock to the original market pattern caused by Xiaomi as the biggest variable in the air - conditioning industry. In the second quarter of 2025, Xiaomi's air - conditioner shipments exceeded 5.4 million units, with a growth rate of over 50% for three consecutive quarters. According to Aowei Cloud Network data, Xiaomi ranked fourth with a 10% market share.
In September this year, Xiaomi's air - conditioners launched a "10 - year free repair" service. Zhu Lei "counterattacked" again, saying that "a 10 - year free repair is a commitment, but not needing repairs for 10 years is real strength", and added that Gree proposed the "10 - year free repair" service in 2021, and its products have been verified by the market for 30 years.
Behind the war of words between the two sides is the reality that the industry and the market have cast a "vote of no confidence" in Xiaomi's OEM model.
In 2018, when Xiaomi entered the market with the Mi Home Internet Air - Conditioner, it used the OEM model for its initial layout. This is the approach that Xiaomi started with and is most familiar with, but it has also been criticized as "just a contract manufacturing factory without core technology".
Dong Mingzhu, the chairperson of Gree Electric Appliances, once publicly questioned: "What is your technology?"
In May this year, some consumers noticed that the outer packaging of Xiaomi air - conditioners indicated the manufacturer as "Beijing Xiaomi Electronics Co., Ltd.", but the internal label showed that the producer was Sichuan Changhong Air - Conditioner Co., Ltd. Some netizens joked that "it's more cost - effective to buy Changhong directly".
In this situation, the importance of this self - built smart home appliance factory to Lei Jun and Xiaomi is self - evident.
In the statements of Lei Jun and Lu Weibing, keywords such as "closed - loop", "AI quality inspection", "intelligent manufacturing", "benchmark factory", and "top - level standards" are all strengthening a new perception externally: Xiaomi is no longer just setting standards and doing OEM. It has truly mastered the entire product chain from parts to finished products.
Image source: The poster of Lei Jun's sixth personal annual speech
This also reflects the core transformation logic of Xiaomi in recent years: from the OEM model (assembly factory) to hardcore self - manufacturing (intelligent manufacturing). In Lei Jun's words, it is to make large - scale investments in underlying core technologies and transform from an "Internet company" to a hardcore technology company.
Lei Jun's Knots and Xiaomi's Self - Vindication
To some extent, the outside world's doubts about "Xiaomi being an assembly factory" are a knot in Lei Jun's heart. Before large home appliances such as air - conditioners became a new growth engine, Xiaomi was labeled as an "assembly factory" because of its mobile phone business model.
The origin of this statement is not complicated: In the early days, Xiaomi phones used Qualcomm chips, Samsung screens, and Sony cameras, and the assembly was outsourced to OEM factories. The products followed a cost - effective strategy with low prices, so the outside world formed the impression that Xiaomi "had no technology", "only knew how to integrate", and "only focused on marketing".
Lei Jun felt quite aggrieved about this. In his sixth personal annual speech this year, he poured out his grievances, saying that many people don't really understand Xiaomi and have many inherent biases. There are often some infuriating remarks online, such as "Xiaomi is just an assembly factory", "it has no technology", "it only focuses on marketing and won't go far", etc.
Lei Jun said that these voices once made him fall into severe self - doubt.
Both he and Xiaomi's management have publicly responded on different occasions, stating that "Xiaomi is not an assembly factory". For example, during the live - stream replay of Lei Jun's personal annual speech last year, he pointed out that many competitors, including Apple, use the OEM model, and Xiaomi does too. But he didn't understand why some people called Xiaomi an assembly factory.
He even questioned: Do people really think that Xiaomi just simply assembles ready - made parts and then launches its phones?
Half a month before that live - stream, the Xiaomi Changping Smartphone Factory was completed and put into use. The factory had an investment of 2.4 billion yuan, a building area of 81,000 square meters, and an annual production capacity of up to 10 million flagship phones.
Lei Jun emphasized at that time that the factory had a very high degree of automation, and its biggest highlight was that most of the equipment was independently developed.
On October 17th this year, Lu Weibing was a guest on the "Confrontation" program on People's Daily Online. He once again responded to the doubts such as "Xiaomi has no technical content, only assembles products, and only focuses on marketing".
He said that the essence of technology consumer products lies in technology and products. Products are fundamental, and marketing is just an amplifier. If the products are not good, no amount of marketing can make them sell.
In response to the statement of "assembly factory", Lu Weibing said that OEM is an advanced form of industrial division of labor, and Xiaomi also manages its OEM factories. Last year, Xiaomi opened two of its own factories.
From Lei Jun and Xiaomi's perspective, they must shed the label of "assembly factory".
On the one hand, this label directly threatens Xiaomi's attempt to move upmarket, and even touches on Xiaomi's most fundamental identity anxiety, strategic transformation, and long - term survival logic. In the case of smartphones, consumers recognize the positions of Apple, Samsung, and Huawei in the high - end market because they have the underlying capabilities in chips, systems, ecosystems, and core technologies, winning the market's trust in technology, rather than just relying on hardware stacking and high scores.
If Xiaomi is always regarded as an "assembler", it will face a life - and - death problem of poor product sales, thin profits, and difficulty in elevating its brand.
On the other hand, this is related to Lei Jun's personal dignity and Xiaomi's historical position. Lei Jun is a rare "serial entrepreneur" in the Chinese tech circle. Xiaomi, including Xiaomi Automobile, is his last entrepreneurial venture. He has always wanted to prove that Chinese companies can also produce world - class technological products.
Xiaomi was initially successful with its cost - effective model of "1,999 yuan" and the slogan "For the Fiercely Curious". But Lei Jun is also well aware that a company without core technology is like a house built on the sand, beautiful but likely to collapse with a gust of wind.
Meanwhile, in the eyes of investors, an "assembly factory" and a "technology company" are two completely different things. If Xiaomi is defined as the former, it will never get the same valuation as Apple or Nvidia.
Lei Jun has repeatedly emphasized that "Xiaomi is a hardcore technology company", telling the market and users a new story: Xiaomi is not an OEM factory, not a distributor, not an Internet company, and definitely not an assembly factory. Instead, it is a hardcore technology enterprise that keeps up with the times and has underlying innovation capabilities.
Obviously, building self - owned factories, developing self - designed chips, and entering the automotive industry are all necessary steps for Lei Jun and Xiaomi to shed the label of "assembly factory".
Currently, in Lei Jun's view, this high - investment response method is effective. He gave an example: In previous years, there were many people on the Internet criticizing Xiaomi as an assembly factory. But after the commissioning of Xiaomi's smartphone smart factory and automobile smart factory last year, such voices almost disappeared.
References:
Caitian COVER, "What Gives Xiaomi Air - Conditioners the Confidence to Aim for the Top Two in Five Years?"
Lei Jun's personal annual speeches, Weibo, etc.
This article is from the WeChat public account "Tang Chen's World", written by Tang Chen and published by 36Kr with permission.