Ladies and gentlemen, welcome to Xiaomi's 2025 Interim Results Announcements Investor Conference Call and Audio Webcast. Today's conference is being recorded. If you have any objection, you may disconnect at this time. If you have any questions and would like to raise during the Q&A session later, please press star one on your telephone keypad to register your question. Should you wish to cancel, please press star two. Now, I would like to hand the conference over to your host today, Mr. Xu Ran, Head of Investor Relations and Corporate Finance. Please go ahead. Good evening, ladies and gentlemen. Welcome to the Investor Conference Call and Audio Webcast hosted by Xiaomi Corporation regarding the company's 2025 Interim Results. Before we start, we would like to remind you that this call may include forward-looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions comes from a variety of sources outside of Xiaomi. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for, the company's financials prepared in accordance with IFRS. Joining us on the conference today are Mr. Lu Weibing, Partner and President of Xiaomi Corporation, and Mr. Alain Lam, Vice President and CFO of Xiaomi Corporation. To start, Mr. Lu will share recent strategic and business updates of the company. Thereafter, Mr. Lam will review the company's financial performance in the first half of 2025. Following that, we will move on to the Q&A session. I will now turn the call over to Mr. Lu. Good evening, ladies and gentlemen. Thank you for joining our 2025 Second Quarter Earnings Conference Call. As you can see, this quarter, Xiaomi once again delivered an impressive financial report with both revenue and net profit reaching new record highs. In the second quarter of 2025, amid intense industry competition, Xiaomi's various business lines continued to grow steadily. Group total revenue reached CNY 116 billion, up 13.5% year-on-year, marking the fifth consecutive quarter of record-breaking performance. Gross margin, 22.5%, up 1.8 percentage point year-on-year. Adjusted net profit, CNY 10.8 billion, up 75% year-on-year, marking a new record high for the third consecutive quarter. In terms of specific business operations, there are several new key highlights. U7 was successfully launched and went on sale, setting a new industry record for pre-orders. Xiaomi's first developed 3 nm flagship chips and sales are successfully integrated into three terminal products for market launch. Smartphone business remains among the top three globally, with the highest market share in China during Q2. Number four, home appliance business continues to grow rapidly. Given the recent changes in the external environment and industry competition, there are some key questions about Xiaomi. Let me give some answers. For example, what are the outlooks for Xiaomi smartphones in terms of volume and profits? Can the large appliance business continue to grow? How does Xiaomi view the resurgence after U7? Today marks the release of our Q2 financial results and earnings communication meeting. I will focus on addressing the above questions and share some of my thoughts with you. First, the issue of balancing volume and profits in personal devices. In Q2 2025, we ranked among top three globally in terms of smartphone shipments, with a market share of 14.7%, narrowing the gap with the top two players again. At the same time, according to third-party data, we ranked first in smartphone excavations in Mainland China. Our smartphone shipments have rapidly increased market share in various overseas regions. In Southeast Asia, we are number one, Europe number two, and in the Middle East and Latin America number two. In Africa, our market share stands at 14.4%, an increase of 2.7% year-on-year. Our shipment growth rates in multiple regions have far outpaced the overall market. However, the mobile phone industry has entered a mature phase, with the overall market showing little growth. The brand landscape remains highly competitive, with the top six brands holding very similar market shares. However, the current structure is not yet stable, and we anticipate that leading brands will emerge in the coming years. We are confident that with continued investment in core technology, product innovation, and the deepening of our human vehicle home ecosystem strategy, we will continue to grow. Our goal is to achieve a steady annual increase of 1% in market share in China. Compared to Samsung and Apple, we started later, but we believe that with the improvement of our international market infrastructure, the expansion and deepening of localized operations, and continued breakthroughs in new retail, the gap with the two will continue to narrow. Our goal is to enter the 200 million club in global sales, significantly narrow the gap with Apple and Samsung, and truly establish a three-way stalemate market structure. However, as a mature market, the opportunity for users to upgrade their devices will drive continuous improvements in product structure. Therefore, we continuously advance our high-end strategy. We are continuously leveraging breakthroughs in core technologies to drive premiumization. In May 2025, Xiaomi officially launched our first self-developed 3 nm flagship processor, the XRING O1, and we have to seize the opportunity from AI so as to achieve breakthrough in the model. In May 2025, the open-source multimodal large model, Xiaomi MiMo-VL-7B, was officially launched. In July 2025, two papers by the Xiaomi AI team were selected by the International ICCV. In Q2 2025, in Mainland China, the market share of smartphones priced between CNY 4,000 and CNY 5,000, and between CNY 5,000 and CNY 6,000, increased by 4.5% and 6.5% year-on-year to 20.7% and 15.4% respectively. In terms of brand premiumization, our brand perception continues to improve. In June 2025, we were ranked second in the 2025 Quanzhou Brand Z Top 50 globalized Chinese brands list. In the Chinese market, our smartphone brand ranked second among all smartphone brands in terms of total omnichannel momentum. Looking ahead, in the Chinese market, we'll focus on breaking into the ultra-high-end segment. Simultaneously, we'll drive premiumization in global markets and across all product categories. In terms of other products, our tablet product shipment volume grew 42.3% year-on-year, maintaining the fastest growth rates among the top five global manufacturers. In Q2, wearable band devices ranked first globally in terms of global shipment volume and second in Mainland China. TWS ranked second globally in terms of global shipment volume and first in Mainland China. In June 2025, we officially launched an innovative product, the first Xiaomi AI glasses leading the industry. They are equipped with the solar AI, providing users with powerful multimodal intelligent interaction capabilities. After the launch, not only did sales far exceed expectations, but positive review rates on the JD platform also reached 98%. Regarding the air conditioning business, which is of greatest concern to everyone, according to third-party data, the industry as a whole experienced volume growth, but price declined in the first half. However, we bucked the trend with both volume and price growth, achieving a year-on-year increase of over 60% in shipment volume and a year-on-year increase in ASP. We are confident in our ability to achieve sustained long-term growth. Our home appliances boast a unique advantage in terms of product channel, brand, and users. Our intelligent transformation is based on overall success, and we are confident that innovation driven by user needs can transform the seemingly red ocean of the major home appliance industry into a blue ocean. Guided by this philosophy and our precise understanding of user needs, we're the first to launch innovative subcategories. At the same time, we fully understand that maintaining a sustained competitive edge in product competitiveness requires not only product planning that exceeds user expectations, but also a deeper understanding of core technologies and proactive, sustained, high-pressure investment. This has been our unwavering commitment over the past few years. We won't take part in price competition. We will enhance our customer insights and user insights to deliver products that fully benefit users. We believe that with time, the large appliance business will continue to grow. In addition to major appliances, our many small appliances have also tremendous potential. For example, our smart door locks, air purifiers, range hoods, and other product categories are also growing rapidly. Turning to Xiaomi EVs, in Q2, we delivered 81,302 new EVs. In July, we delivered over 30,000 new cars in a single month. We continue to refine our technology on the track. In April 2025, our Xiaomi SU7 Ultra prototype once again tackled the Nürburgring Nordschleife circuit, setting a new record for prototype lab times on this, with a time of 6:22 and ranking third globally. In June 2025, our first SU7 product, the Xiaomi SU7 series, was officially launched. Within 18 hours of its release, cumulative pre-orders exceeded 240,000 units. The Xiaomi SU7 series builds on the outstanding performance of the Xiaomi SU7 series, once again creating a Xiaomi-style blockbuster sensation. The continued success demonstrated the phased achievements of the capability-driven strategy. We expect to officially enter the European market by 2027. We are not only confident in the next success of Xiaomi Automobile, but also in the next success of our model and methodology. Our overall strengths are being enhanced. For many consecutive quarters, we have delivered very remarkable results. Finally, what I would like to say is that in July 2025, we are actually included in the Fortune 500 list for the seventh consecutive year, ranking 297th, an improvement of 100 places from last year. We fully understand that transitioning from an industry challenger to an industry leader and from excellence to greatness requires further breakthrough and understanding and continuous enhancement and upgrading of capabilities. Today's Xiaomi is more strategically patient than ever before. We will adhere to our strategic priorities of technological hardening, brand premiumization, market globalization, and ecological model transformation. In the past five years, you have seen our transformation. Over the next five years, Xiaomi will undergo a qualitative change. That concludes what I wanted to share with you. Now, I will pass the floor to Alain. Thank you, Mr. Lu. Good evening, investors and analysts. As Mr. Lu shared with everyone just now, in Q2, guided by the group's core business strategy of steady progress, we once again achieved outstanding performance. Our total revenue, revenue from mobile and AIoT division, revenue from smart EVs and AI and new initiatives division, and adjusted net profit all reached record highs. In Q2 2025, our total revenue was CNY 116 billion, up 30.5% year-on-year. Gross margin was 22.5%, an increase of 1.8 percentage points year-on-year. Our smartphone and AIoT division generated revenue of CNY 94.7 billion, up 14.8% year-on-year. Gross margin was 21.6%, up 0.5 percentage point year-on-year. Regarding smartphones, revenue for this quarter was CNY 45.5 billion, accounting for 39.3% of total revenue. Global smartphone shipments for this quarter reached 42.4 million units, marking the eighth consecutive quarter of year-on-year shipment growth. According to Canalys, our global smartphone shipments ranked third this quarter, with a market share of 14.7%, marking 20 consecutive quarters in the top three globally. Additionally, we ranked among the top three in smartphone shipments in 60 countries and regions worldwide, and among the top five in 69 countries and regions. According to third-party data, in Q2 2025, we ranked first in smartphone sales in Mainland China. Our smartphone gross margin in this quarter was 11.5%. Our premiumization strategy achieved significant results, with product competitiveness continuing to improve. According to third-party data, the proportion of premium smartphone sales in our total smartphone sales in Mainland China reached 27.6%, an increase of 5.5 percentage points year-on-year. For AIoT, in this quarter, revenue reached a record high. In this quarter, AIoT revenue was CNY 38.7 billion, up 44.7% year-on-year. In this quarter, IoT gross margin was 22.5%, up 2.8 percentage points year-on-year. Multiple product categories achieved both volume and price growth year-on-year. In this quarter, revenue from smart large appliances reached a record high, up 66.2% year-on-year. Among these, our air conditioner shipments exceeded 5.4 million units, with year-on-year growth exceeding 60%. For refrigerators, shipments exceeded 790,000 units, up more than 25% year-on-year. For washing machines, shipments exceeded 600,000 units, up more than 45% year-on-year. According to Kandelis data, in Q2 2025, our tablet shipments globally grew 42.3% year-on-year, maintaining the fastest growth rate among the top five global manufacturers. Our TWS ranked second globally in shipments and first in Mainland China. Our wearable band ranked first globally in shipments and second in Mainland China. In June 2025, we officially launched our first Xiaomi AI glasses, which excel in terms of weight, battery life, and memory, while also featuring electrochromic functionality and integrating Super AI Assistant, providing users with powerful multimodal intelligent interaction capabilities. Regarding internet services, we continued to expand our user base. In June 2025, our global MAUs reached 731 million, up 8.2% year-on-year. Among them, MAUs in Mainland China reached 185 million, up 12.4% year-on-year. In Q2 2025, our internet services business revenue reached CNY 9.1 billion, up 10.1% year-on-year. Gross margin in this quarter for the internet services business was 25.4%. Our overseas internet business revenue was CNY 3.1 billion, or CNY 3 billion, up 12.6%, accounting for 32.9% of total internet services revenue, setting a new record high. In Q2 2025, revenue from our smart EVs and AI and new initiatives segments reached CNY 21.3 billion, accounting for 18.3% of total revenue. Of this, revenue from smart EVs sales amounted to CNY 20.6 billion, while revenue from other related businesses totaled CNY 0.6 billion. Gross margin for smart EVs and AI and new initiatives segments reached 26.4%. In Q2 2025, we delivered a total of 81,302 new vehicles, with ASP of CNY 253,662. As of July 2025, since the launch of Xiaomi EVs, cumulative deliveries have exceeded 300,000 units. Our new business operating loss continued to narrow, with the operating loss in this quarter amounting to CNY 300 million. We are steadily executing the group's new 10-year goals, that is investing heavily in underlying core technologies and striving to become a global leader in next-generation hardcore technology. In Q2 2025, our R&D expenses reached CNY 7.8 billion, up 41.2% year-on-year. The number of R&D personnel reached a record high at 22,641, accounting for 46.2% of total number of employees. In Q2 2025, total operating expenses amounted to CNY 17.2 billion, excluding CNY 5.9 billion in new business investment expenses. Our core business operating expenses totaled CNY 11.3 billion, with an expense ratio of 11.9%, maintaining a healthy level. In terms of net profit, adjusted net profit for the quarter reached a new record high for the third consecutive quarter, amounting to CNY 10.8 billion, a year-on-year increase of more than 75%. Finally, about ESG, we actively fulfill our corporate social responsibilities and are committed to promoting low-carbon development. In terms of low-carbon practices, our office premises used about 7.2 million kWh of green electricity in the first half of this year, an increase of over 270% compared to the same period last year. In the first half of this year, PV power generation of our EV factory, total energy saved reached 6.9 million kWh, reducing carbon emissions by over 4,160 tons. Besides, the Xiaomi SU7 series secured the top spot in the large pure EV category on both the JD Power 2025 China New Vehicle New Energy Vehicle Product Appeal Index and New Vehicle Quality Study rankings. In July 2025, the North China region of Mainland China was hit by heavy rainfall, and the Xiaomi Public Welfare Foundation donated CNY 5 million in cash and CNY 315,000 worth of urgently needed disaster relief supplies to support emergency aid, temporary relocation, and post-disaster reconstruction efforts in the affected areas. In March 2025, the Xiaomi Public Welfare Foundation donated MMK 500 million to the Myanmar Red Cross Society to support emergency relief and post-disaster reconstruction efforts in Myanmar following the earthquake. In terms of scientific and technological innovation, as of June 30, 2025, the Xiaomi Innovation Joint Fund had provided total funding of over CNY 210 million for research projects, supporting a cumulative total of 141 teams in Mainland China. Thank you all for your support in Xiaomi. That's all in our presentation. Now we can proceed to Q&A. Thank you, Alain. Now we will move on to Q&A. In order to allow more investors to have the chance to ask questions, please limit your questions to a maximum of two each time. Thank you. Thank you. We will start the Q&A session. If you would like to ask questions, please press star one. If you would like to cancel, please press star two. Thank you. First question, Andy of Morgan Stanley, please. Thank you, management. Congratulations for your Q2 revenue and profits, new record highs. This is amazing. I have two questions. The first question is about AIoT. For the AIoT segment in Q2, it performed very strongly. Can you share with us the performance in the Chinese market and overseas market? For the overseas market, you are expanding very fast. In the future, for new retail building, new retail system building, what will be the positive impact on AIoT business? The second question is about smartphone. In Q2, smartphone business gross margin came down quarter on quarter. From the industry's point of view, if we look at some costs, they are rising. For smartphone gross margin, given the short-term fluctuations, what will be the long-term development trend? For spare parts cost increase, this is one risk factor. At the same time, the degree of concentration in the industry rises, and you are working more on premiumization. With these two positive factors, can they help your smartphone business to achieve growth in gross margin in the future? Will there be other factors that will cause impact on your long-term gross profit of smartphone? Thank you. Thank you. First question is about IoT and overseas new retail. I think for IoT business right now, no matter whether you talk about the Chinese market or overseas market, we have good growth rates in the Chinese market because we have built the new retail system some time ago. For IoT, we focused more on online, less on offline. In the past two years, we focused a lot on offline. If you look at our offline stores, we opened a lot of larger stores, but this is not enough. We have the next generation iteration plan for the overseas market. It benefited from channel expansion. In the past, for IoT, our channels are narrower. In the past two to three years, we opened up the overseas channels. For IoT in China and overseas, it is doing quite well now. For the businesses that we have built, basically, they are mainly sold in China. In China, the numbers may be higher. Growth rates in the China market will be higher than overseas for large appliances. For new retail, this year, it is a scale close loop. Last year, we completed our exploration and research. In the first half, we opened 200 stores. For major countries, we have opened one or more Xiaomi direct retail new retail stores. We have incorporated many working partner stores. After this year's effort, next year, we believe we will put in more efforts to open 1,000 stores/ year. After that, for the overall IoT business, that will be a big help. If you don't have controllable channels for IoT, the efficiency will be very low if you get into different platforms. I believe with our effort, overseas growth potential is going to be huge. That's my first answer. You asked about gross margin for smartphones. This year, I believe if you talk about price increase for memory, internal memory or storage, it is much higher than expected, especially for the low-priced market. We realized that the increase in price was actually highest in that segment. For low to medium-end products, the impact is bigger. This year, in March and April, there were actually some restrictions on the materials and also battery materials as a result. This year, I think if you talk about cost for smartphones, this year, if you look at all these factors, I think there will be a cost increase. In Q2, together with our product structure adjustment, in Q2, we launched some new products, but very few. In the first half in China, we only launched six new products. For other brands, maybe 10+ or 20+ new styles. For us, in Q2, together with these factors, gross margin came down as compared to Q1, overall speaking. I think this year, in Q4, it is going to be the quarter where most of our new products will be launched. In Q4, I think gross margin will rise back. This is the situation of gross margin this year. In the long term, I think we have to tackle the issue by means of premiumization. For premium products, I think that is the focus of our investment. For tech investment, I think chip, OS, these are the main core technologies of our investment. Let me supplement. For Q2, it is peak season for air conditioners. In Q2, shipments exceeded 5 million units already. This will drive our overall Chinese market IoT revenue. It will grow faster. That is the point I would like to add. Thank you. Thank you very much, Mr. Lu and Alain, for the clear answers. Thank you. Next question is from Timothy of Goldman Sachs. Please go ahead. OK, Mr. Lu, Alain, good evening. Thank you for the opportunity once again. Congratulations on the strong Q2 results. I have two questions to ask. First question is about AIoT business gross margin. On a year-on-year basis, there is a significant increase. On a quarterly basis, there is pressure. For quarter on quarter, what is the source of the pressure? Besides, for the home appliance market, competition will be more intense, especially given the high base. In China, there may be the risk of slowdown in growth. In the second half of this year for IoT, what is the trend of gross margin? Next question is about your R&D expenses. In Q2, your R&D expenses were up more than 40% year-on-year. This growth rate is the fastest in the past years. Given this year-on-year growth, what are the directions of investment mainly? In Q2, we saw that you introduced a 1 million place driving technology. What is the progress of this latest development for new businesses, large models, and chips? Are you going to increase investment quarter after quarter? Yes, thank you. Regarding AIoT gross margin, there is an increase on a year-on-year basis, but the slowdown in quarter on quarter, I think this is mainly because of 618 in the Chinese market. From my point of view, I think the main point is the impact from 618. There are no other major variables and changes for home appliance. Given the current national subsidy situation for this home appliance segment, at the beginning of the year, we set our estimates, but there isn't much impact. We can actually complete our overall targets set at the beginning of the year for the large appliance segments. The overall trend and targets have not been changed. That's the first point. Regarding R&D, for R&D, you ask about the direction of investment. No matter whether we talk about core technology, for example, chips, AIoT, and also various product line technologies like smartphones and EVs, we are making investments all around. There is a wide scope of investment for us. Today, we enjoy such good growth and good word of mouth and good competitiveness. We also have a good gross margin and net profit margin. I think this is closely related with our investment. Without such investment, we won't be able to deliver such a report card. Besides, you mentioned 1 million. In fact, it is 10 million eclipse. At present, when it comes to the assistance to driving, I think it is quite big. Eclipse equals to about 30 seconds, roughly. All the sensors can be incorporated. Comparing with the past, I think the assisted driving precision can be greatly enhanced. Regarding large models and chips, our investment is basically in line with our original plan and budget. Will it increase? Of course, we will increase as compared to the previous quarter. Alain, anything to add? Yes, a few points to add fast. For AIoT gross margin, last quarter, I said that in Q1, there were not much sales promotion activities. In Q2, there was the 618, as mentioned by Mr. Lu. In the past few years, when we adjusted the gross margin of AIoT, then you can see the 22 point something, which is a historical high, and it is only lower than last quarter. For four consecutive quarters, our gross margin of AIoT was more than 20%. For IoT gross margin, you can see clearly that it is rising gradually. Secondly, for R&D expenses, you asked about AI and chips. We will continue to increase investments. However, there are some variances. For chips, I think it is mainly about research. For AI investments, it is about hardware depreciation investment. These are the points I would like to add. OK, thank you. Next question is from Zhou Yi of UBS, please. Right. Thank you, management. Congratulations on your very good Q2 results. Now, my question is, from Q2, a 26.4% gross margin for EV, this is very amazing. By means of changes to your product structure, on a quarterly basis, you delivered very fast growth rates. For medium to long term, for EVs, what will be the stable level of gross margin? In the short run, in the second half of the year, is there a target that you are confident in? Looking at the uncertainties in the second half, what will be some uncertain factors in relation to your profitability? Thank you. Thank you. For gross margin, in this quarter, our gross margin grew as compared to Q1. Gross margin was quite satisfactory because of a few reasons. First, if you look at our ASP, this quarter, ASP is CNY 253,000- CNY 254,000, including tax, then around CNY 286,000- CNY 287,000. With this selling price, basically, it is the VBA level. Thanks to our premiumization strategy success, this is the first point. Secondly, I think it also owes a lot to data and also our very standardized SU7 platform. They use the same platform, SU7, U7. The modularization and standardization is very good. There is collective strength as well. Even though our overall scale is not big, for a platform and category, the scale is very big. I think we enjoy economies of scale as a result. These are the two points explaining the good gross margin. In the long run, regarding the gross margin, I think it's difficult to say whether we can maintain this good level. It all depends on whether we can maintain good order volume. With good order volume, then I don't need a lot of other monetization efforts. Regarding the second half of the year and the profitability, we have a target. We hope that in the second half of this year, we can achieve a single quarter or single month profitability. It is difficult to say whether it will happen in which month, in Q3 or Q4, but this is our goal. This has not changed. We are working hard towards this goal. I would like to say that this is about a certain month or a certain quarter from 2022 to the first half of 2025. In new businesses, we have altogether invested CNY 30 billion. In the financial statements, there is still a lot. If we have to achieve accumulated profits, we still take some time. It is still a long way to go. That's all in my answer. Thank you. Thank you, Mr. Lu. I have still the second question to ask about internet. Overseas growth, comparing with Chinese growth, is faster. Apart from shipment growth, in terms of our pool composition and overseas internet business model, have you made any new attempts? Thank you. We have not got such detailed data. We need some time to do some studies. I think your research is very detailed. At present, in overseas, all along we said that we want to do localized operations. Now, with this capability, comparing with the past in overseas markets, we can achieve more refined operations. I think this is the benefit arising from refined management as compared to the past. That's the first point. If you look at our premiumization progress in the first half, for products over $600, the year-on-year growth was 50% or 60%. Product structure has enhanced. The ARPU improvement, this is very helpful. If you look at overseas ARPU, it is around $4, roughly. You can work that out. As Mr. Lu just said, we implement more localized operations. When our user base expands, we do more localized operations. Besides, there are more international brands or apps willing to work with us. In the past, there were more Chinese apps going abroad with us. Now we have the localized operation capability. We have attracted more local apps and international big apps working with us. Thank you, Mr. Lu and Alain, for the answers. That's all from me. Thank you. Thank you. Next question is from Yingbo Xu from CITIC. Yes, Mr. Lu, Alain, good evening. I have two questions. First of all, I would like to congratulate you on the excellent results in Q2. I have two main questions. First question, now in AI, in these years, you keep on investing. You have your own large models and AI glasses. Also some upgrades in terms of your driving cockpits. In the future, in terms of AI development direction, software and hardware, what are your thoughts? Second question will be more longer term. In Q2 this year, the number of connected devices increased a lot. Can you share with us in the future, given this ecosystem and such a big user base, what is your long-term plan, please? What are your long-term targets? Thank you. For AI, we have said many times at present in terms of AI. First, we have AI large model. We'll keep on investing. There is also our application layer. Together with large models, there is the need for a conversion. That's a SaaS layer. Our team has done basic layouts and deployments. For AI application equipment, there is a lot. For example, cockpits in EVs, AI glasses, and so on. There are many wide applications. Today I have a few points. I think we'll see a big future for the new AI. In the application, we are not inclined to either terminal-based or cloud-based. It depends on user experience. We'll choose the one delivering better user experience. However, when the efficiency is higher for the model and when the computing power is enhanced, I think terminal-based will be the main trend. There will be more and more devices that will be AI-based or AI-empowered. You just mentioned the number of connected devices. That number doesn't include smartphones and tablets. Our long-term vision is that we want to form a closed loop. This is for sure our goal. Now we are connecting the devices, but the user stickiness is still not enough. When stickiness is not enough, there is still a gap in terms of the value created for the users. If stickiness can strengthen, we can turn our company into a network economy company. I think this is a big upgrade for our business model. With this upgrade, I think our inner value will see huge change. Let me supplement. It is not only about AI smartphones. If you look at our U7 and also AI glasses, there are many AI functions. For example, AI integrated with voice and also AI translation and so on. They are in many of our products like EVs and glasses. In terms of AI application, we have actually incorporated many scenarios. AI is being integrated with many other products as well. Thank you. Thank you, Mr. Lu and Alain. Very clear answer. We do look forward to the overall whole ecosystem of AI and further growth. Thank you. Thank you. Next question, Kyna from Citi, please. Thank you, management, for giving me this opportunity. I have two questions. First, regarding the smartphone industry, in the first half of the year, some manufacturers at the beginning were very aggressive. Later on, they realized that the industry was flat. In the second half of the year, how do you see the global smartphone growth? Is it going to be rather flat? In China, everyone is talking about whether there will be renewal of subsidies and other encouraging or encouragement policies to boost consumption. How do you see the Chinese market for the whole year regarding the smartphone shipment target? CNY 175 million-CNY 180 million, can you attain the target? The next question is about EV business. In the future, just now you talked about gross margin. If we look in a long-term, more reasonable level with a certain scale, then what is a more reasonable gross margin level? Now the state is talking about anti-price competition, and the whole industry will move towards a healthier situation. In the future, are you going to develop overseas? In 2027, you want to go into Europe. How should you get yourself prepared for Europe? Will there be impact on your future profit because you need to strengthen your business overseas? I would like to get your views. Finally, I hope that you can continue to achieve new highs in your results. Thank you. Your first question is about smartphones. For smartphones, this year, at the end of last year or early this year, people were optimistic about the smartphone industry. If you talk about various brands' targets, are they rather positive or proactive? After half a year, it seems that in the overall industry, there was not the expected volume growth. Of course, it is just natural that there would be price war as a result. This is a basic rhythm. This year, I think everybody's inventory is more or less at the level. In the second half of the year, the market will become more rational. Overall speaking, I think for the whole year, for the global industry, there won't be growth or very, very small growth, only 0.% growth, I guess. I think there would not be much progress. That's my basic judgment of the overall global industry. Given the overall situation this year, we have revised our targets. It will be around 175 million in shipments. That's our target. Comparing with last year, I think we need a growth of 5%- 6%. This growth, comparing with the overall industries, is a lot higher. Given our strength and our company situation, in terms of product structure optimization and ASP increase, our expectation is higher than that of scale growth. That's our strategy for smartphones. Regarding EVs, gross margin, and inflation and overseas development, first of all, we do agree with anti-inflation. For Xiaomi EVs, we don't take part in price war and inflation. We will do our own job well. In terms of order delivery and so on, we will do a better job in terms of development of new cars, IOs, and models. This is our biggest concern. After doing all this well, I believe that gross margin is a natural result. If your products are not competitive, at the end of the day, you can only compete on price and do quick sales promotion. Gross margin cannot rise. For Xiaomi, this is something that we insist on. We have to do our platform well. We need best sellers, and we have to control our spare parts cost. Then we can have our advantages. Xiaomi adheres on introducing best sellers for overseas developments. Today in China, the business model we have developed in China can also apply in the overseas market. When we get into Europe, for all our models and tactics developed in China, they will be brought to Europe as well. In 2027, we're going to get into Europe. We are doing the researches and preparation. So far, we have not got the specific product plan yet. For future gross margin and net margin, it's difficult to say for this moment. In the past few years, no matter whether we talk about chips or EVs, we first completed the difficult task. We started with the most difficult market, that is Europe. We want to do a good job in the difficult task first, and then we'll move on to the easier ones. Thank you. Next question, CICC, please. Congratulations on the Q2 results. I have two questions. First, about financials. In Q2, if you look at revenue for EVs, there is quarter on quarter growth. Gross margin also increased, and for EV business, gross margin grew significantly. Net profit is also stable. There is an increase on the cost. Also, can you explain the increase in costs for EVs? In the coming quarters, will there be a big change in the overall judgment of cost? The next question is about your brand strengths. You just mentioned your EV business. EV business is successful in China. Xiaomi's brand strength is very strong. You have already formed a strong brand in China, and you want to develop the overseas market. How are you going to shape your brand strength in overseas markets? How are you going to make investments? Thank you. For gross margin, we do not have much incremental information. Our gross margin is quite good. Our ASP is quite good with tax CNY 284,000. I think we are already amidst a high-end vehicle already. SU7 that we have just launched has reached our expectation. We have reached economies of scale. Scale is quite good. Our production efficiency is very high. It supports a quite satisfactory gross margin. If we look towards the future, on the cost end, we haven't seen big changes or big change variables. For overseas brand strength, globally and also in Europe, our brand awareness is 95% or above. In some countries, like Spain, 98%- 99%. For Xiaomi's brand awareness in the overseas market, there isn't much problem. For Xiaomi EVs, they are not very reputable right now. Before 2027, we have to solve this issue about brand awareness of Xiaomi EVs and also how to enhance users' interest in Xiaomi EVs. At present, some users use their own ways to transport their cars to Europe already. I have met a Mi Fan who had brought their car to Britain. I can see that he has driven his car to many, many countries in Europe, being seen by many people. The same happened in Germany. Many people had seen our Xiaomi EV. Today, even though brand awareness of Xiaomi EVs seems not high, maybe it is a lot better than our expectation. I'm not too worried about this brand awareness issue. In China, we also build from scratch. I'm not particularly worried. Thank you very much. Thank you. Thank you. Next question, Saiyi He from Huatai Securities, please. I have two questions. First question, recently in China regarding robots, new enterprises, and so on. This is rather hot as a topic. How do you see this robot category and the related business opportunities? Second question, for home appliances. Large appliances business grew fast, especially for air conditioners. 5.4 million units release. Now online, you are already number one. For your large appliance business, especially air conditioners, what are you going to do to enhance it further to a new level? First, regarding robots, I won't comment on that. Let me talk about Xiaomi. We are positive about opportunities from robotics. We have already invested in it for four to five years because we are optimistic. For embodied robots in factories and its application, we are also positive. The point is, in our own factories, can we first complete some closed loop and then we can enhance the efficiency? Right now, the difficulty is very high for such robotics. I haven't seen a very clear timetable for commercial closed loop. It may take some more time. Next question is about large appliances. Let me first correct myself. We are not really number one. This is a point that I would like to correct. We haven't reached number one. There is still a big gap from number one. Now we are working on large appliances. Our air conditioners develop fast. For refrigerators and washing machines, they are also developing fast. For air conditioners, if you talk about scale and also value, they are bigger than the combined value of washing machines and refrigerators. Our investment into air conditioners is bigger, and we are more advanced by two years than the other two categories. I think our selling price is also quite good. This year, price war is intense in the industry. If you look at Xiaomi first, our ASP rose by CNY 200, roughly. This is a rough estimate, around CNY 200. Given such a situation, our air conditioner gross margin also increased year on year. This year, if you look at our results, our scale grew 60% from last year. ASP also grew CNY 200 from last year. Gross margin also increased from last year. Based on these circumstances, these are the results that we have achieved. Overall speaking, the price war in the industry might affect us a little bit, but it won't block our forward development trend. We do not care much about the ranking on a monthly or quarterly basis. In the long run, we have to look at the change in the layout in the industry. We have to see whether our products are competitive and whether our strategies are good. After we sell our products to users, are our user ratings high? These are important. If all these are positive, then definitely we can move forward. Xiaomi has still not reached the ceiling that we have in mind for air conditioners and for large appliances. In the Chinese market, there are still a few times of growth potential, not to mention overseas. We've just started in the overseas development. There are still many times of growth potential. We have a lot of confidence in Southeast Asia. We did quite a good job in this period. Thank you. Thank you. Because of time, we'll now take the last question. Kuai Jian, please, from Oriental Securities. Management, my first question is about the AI talent strategy. Recently, for overseas AI talents, they are being snatched intensely. For Xiaomi, your R&D expenses continued to rise some time ago. There were rumors about your AI talent deployment. When it comes to talent strategies, can you explain more? In which areas did you make deployments? What kind of talents are you more inclined to hiring? Thank you. This is a very broad topic. AI strategy, this is a broad topic. It is very difficult for me to give you a brief answer. If you take a look at our recent results and deliveries, you will be able to deduce that we have many remarkable talents in our company. Please rest assured. We have not operated for a long time in this area yet. I think in the future, there will be more and more positive outcomes. This year, the expenses are about CNY 13 billion, 25% was invested into AI. First, about basic investment into computing power. That is also one important point. That is all I can say for this question. Thank you. Thank you. Thank you. We'll conclude the call here. Thank you very much. Thank you. This concludes the conference today. Thank you again for joining us. We hope you will continue to support Xiaomi Corporation. Goodbye.