Xiaomi 12S Ultra Has A Production Cost Of Almost Half The Selling Price

Xiaomi launched the Xiaomi 12S Ultra – its latest flagship model earlier this month. In addition to upgraded hardware, this is also the first Xiaomi phone to be produced in cooperation with Leica - a famous camera brand from Germany. Currently, Xiaomi 12S Ultra is being sold in China with prices starting from 5999 yuan ~ 890 USD.

According to a report from Couterpoint Research, the production cost of a Xiaomi 12S Ultra is only about 516 USD for the 8GB RAM and 256GB memory version. In which, components such as processors, screens and cameras account for nearly two-thirds of production costs.

Of course, this does not mean that Xiaomi makes a profit of 374 USD for every 12S Ultra sold, because the full cost of production above does not include other costs such as marketing, research and development, service. user and tax.

In 2019, CEO Lei Jun once affirmed that Xiaomi would not make too much money from the smartphone business, capped the profit margin at 5%. However, it is still unclear whether the company will still keep this promise with the Xiaomi 12S Ultra.

“We will always keep an overall profit margin of 5% on our entire hardware business” – Xiaomi statement when asked about profit margin cap during the Mi 11 Ultra launch event on last year.

In fact, there are still some individual products with higher or lower profit margins, as long as the profit margin for Xiaomi's entire hardware business is capped at 5%.