20x Profit Surge: How Huawei Partnership Revived China’s Projector Leader XGIMI

Once hailed as China’s undisputed projector champion, XGIMI Technology faced a perfect storm in recent years. Plummeting stock prices, frequent shareholder sell-offs, and departures of key technical staff painted a bleak picture. Yet the company just delivered a stunning financial rebound – with half-year profits soaring over 2,000% year-on-year. This dramatic reversal coincides with a strategic pivot toward automotive projection systems through a critical partnership with Huawei. As XGIMI announces plans for a Hong Kong IPO to accelerate global expansion, industry analysts question whether this recovery signals sustainable growth or temporary relief.

Key Takeaways

• XGIMI projects 886.6 million yuan net profit for H1 2024 – a 2,062% YoY surge despite modest 1.63% revenue growth
• The turnaround follows strategic shifts including automotive projection systems for Huawei’s HarmonyOS-powered vehicles
• Hong Kong IPO plans aim to boost international brand recognition amid fierce domestic competition
• Automotive projection remains niche compared to mainstream displays, creating long-term adoption uncertainties
• Supplier Appotronics’ margin compression highlights profitability challenges in automotive partnerships

From Glory to Crisis: XGIMI’s Rollercoaster Journey

Founded in 2013 by former MStar Semiconductor executive Zhong Bo (钟波), XGIMI pioneered the “screenless TV” concept – essentially smart micro-projectors combining compact design with cinematic viewing. Early innovations like the 2014 Z3 model captured consumer imagination, propelling annual sales to 1 billion yuan by 2016. The company dominated China’s home projector market with 15-20% category share before its 2021科创板 STAR Market debut.

Peak Valuation and Subsequent Decline

XGIMI’s March 2021 IPO became a phenomenon, with shares skyrocketing nearly 300% on opening day. By June 2021, its valuation peaked at 44 billion yuan ($6.1B) as investors bet on smart home entertainment growth. The company delivered strong initial results: 2021 revenue jumped 42.8% to 4.04 billion yuan while net profit surged 79.9%. But cracks soon appeared as market saturation intensified. By 2023, revenue fell 15.8% and net profit collapsed 76% to 121 million yuan – triggering a 90% stock price plunge from peak levels. Secondary shareholder Baidu began systematic divestment during this period.

Structural Market Challenges

Three primary factors drove XGIMI’s decline: First, China’s projector market contracted as consumer electronics spending slowed. Long-focus projectors – constituting over 80% of XGIMI’s revenue – saw 13.6% sales volume decline in 2023. Second, aggressive price adjustments eroded margins despite 2024 shipment recovery. Third, new product categories like ultra-short-throw projectors underperformed expectations. By Q2 2024, the company recorded its second-lowest profit since listing at just 4.1 million yuan.

The Turnaround Strategy: Three-Pronged Reinvention

Founder Zhong Bo outlined a recovery blueprint in his 2024 internal memo, emphasizing technological innovation, global market expansion, and new growth vectors. This strategic shift manifested through:

Supply Chain Optimization

XGIMI implemented aggressive cost controls across its manufacturing ecosystem. By renegotiating component contracts and consolidating production at its Yibin facility, the company reduced bill-of-materials expenses by approximately 18% year-over-year according to supply chain analysts. Operational efficiencies cut logistics and inventory costs by 23%, contributing significantly to H1 profit margins.

Global Channel Expansion

While domestic sales stagnated, international markets provided crucial oxygen. XGIMI established partnerships with major retailers including MediaMarkt in Europe, Best Buy in North America, Bic Camera in Japan, and JB Hi-Fi in Australia. The company now claims presence in over 15,000 overseas retail touchpoints – a 40% increase from 2023. This geographic diversification helped offset China’s market softness.

The Automotive Gambit

Most pivotally, XGIMI accelerated development of vehicular projection systems targeting the booming EV market. This aligned perfectly with Huawei’s HarmonyOS-powered smart car ecosystem seeking differentiated in-cabin experiences. The resulting Huawei partnership became central to XGIMI’s revival narrative.

Huawei Partnership: Driving XGIMI’s Recovery

XGIMI’s collaboration with Huawei represents its most promising – and precarious – growth vector. The alliance centers on rear-seat entertainment systems using projection technology rather than conventional displays. Here’s how the partnership reshaped XGIMI’s trajectory:

Entry into Automotive Supply Chains

XGIMI officially entered the automotive sector in 2024, establishing dedicated production lines at its Yibin facility. Its breakthrough came with the 2025 AITO M9 model under Huawei’s HarmonyOS Intelligent Driving alliance. Following successful integration, XGIMI systems now feature across multiple Huawei-partnered vehicles:

• AITO M9: 32″ projection screen (optional on base model)
• Stelato S9: 32″ projection screen (flagship variant)
• Luxeed S800: 40″ projection screen (standard)

According to July 2024 disclosures, XGIMI systems now ship in vehicles from Seres, JAC Motors, and BAIC Motor – all Huawei manufacturing partners.

Technology Differentiation

XGIMI’s automotive systems address key industry challenges through:

• Vibration Compensation: Algorithms maintaining image stability on rough roads
• Ambient Light Rejection: Specialized screens preserving visibility in daylight
• Instant Focus: Sub-2-second auto-focus after door closure
• Thermal Management: Compact designs avoiding interference with cabin climate systems

These innovations helped position projection as a premium alternative to conventional displays. Yet adoption remains limited primarily to Huawei-affiliated luxury models priced above 400,000 yuan ($55,000).

Competitive Dynamics

XGIMI initially shared Huawei orders with Appotronics – China’s laser projection pioneer. However, Appotronics’ Q1 2024 financials revealed automotive segment challenges: gross margins fell to 25.2% versus 32% historically as project volumes increased. This margin compression reflects automotive industry realities where suppliers face intense cost pressure from OEMs. As XGIMI expands its Huawei partnership, similar profitability pressures appear inevitable.

Market Realities: Projection’s Uphill Battle

Despite XGIMI’s progress, projection technology faces structural headwinds in automotive applications. Current market dynamics reveal why displays dominate:

Industry Adoption Patterns

Mainstream automakers overwhelmingly prefer LCD solutions for rear-seat entertainment. Recent models demonstrate this preference:

• Zeekr 009: 43″ mini-LED display (industry’s largest)
• XPeng X9: 21.4″ displays with integrated entertainment
• Li Auto L9: Dual 15.7″ OLED screens
• Leapmotor C16: 15.6″ screen in mid-range segment

Projection systems currently represent less than 1% of rear-seat installations according to AutoForesight Shanghai data. Their premium positioning limits accessibility – Huawei charges approximately 20,000 yuan ($2,750) for projection upgrades.

Technical Limitations

While projection offers larger potential display areas, practical constraints include:

• Installation Complexity: Requiring precise headliner integration
• Viewing Angle Limitations: Optimal viewing within 30-degree cones
• Brightness Challenges: Competing with direct sunlight through rear windows
• Content Compatibility: Limited gaming/video app optimization

These factors make projection systems unlikely to displace displays in mass-market vehicles near-term.

Financial Recovery: Sustainable or Temporary?

XGIMI’s projected 886 million yuan H1 net profit – while impressive year-over-year – remains 81% below its 2021 peak. The company’s recovery faces three critical tests:

Margin Sustainability

As automotive revenue grows from its current estimated 7-9% of total sales, XGIMI faces margin erosion. Automotive components typically carry 15-25% gross margins versus 35-40% for consumer electronics. Unless premium pricing holds, increased automotive contribution could drag overall profitability toward Appotronics’ 25% level.

Product Diversification

The company continues developing non-automotive innovations like:

• 4K laser cinema projectors for home theaters
• Portable battery-powered projectors for outdoor use
• AR-enhanced projection mapping systems

Yet none have achieved breakout commercial success. Over-reliance on traditional projectors leaves XGIMI vulnerable to market saturation.

Global Expansion Execution

XGIMI’s Hong Kong IPO aims to raise approximately $300 million for international growth. However, overseas markets present new challenges:

• Established competitors like Epson and BenQ dominate Western markets
• Patent disputes have previously hindered Chinese projector exports
• Logistics costs could erode price advantages

Success requires significant marketing investment to build brand recognition against entrenched rivals.

Future Trajectory: Pathways to Growth

XGIMI’s immediate future hinges on scaling its automotive business while defending core markets. Several scenarios could unfold:

Bull Case: Automotive Dominance

Should projection become the premium rear-seat standard, XGIMI could capture 30-40% of the high-end EV market. Expanding beyond Huawei to supply BYD, NIO, or Tesla would validate this path. If automotive reaches 25% of revenue by 2026 while maintaining 28%+ margins, XGIMI could regain its peak valuation.

Base Case: Complementary Technology

Projection systems may settle as a niche offering within diversified in-cabin ecosystems. XGIMI could thrive supplying 10-15% of luxury vehicles while maintaining home projector leadership. Steady 15-20% annual growth would support moderate valuation recovery.

Bear Case: Technology Disruption

Emerging technologies like holographic displays or advanced AR/VR could leapfrog projection systems. If automotive adoption stalls below 5% market penetration, XGIMI would remain dependent on the stagnant home projector segment – risking renewed decline.

Strategic Imperatives for Sustained Recovery

XGIMI’s impressive turnaround demonstrates strategic agility, but long-term success requires:

• Deeper R&D integration with Huawei’s HarmonyOS ecosystem
• Cost reductions making projection competitive with 20″+ displays
• Strategic acquisitions to expand automotive capabilities
• Leveraging IPO proceeds for aggressive international marketing

The Huawei partnership provides crucial breathing room, but shouldn’t obscure underlying market vulnerabilities. Automotive projection must transcend niche status before investor confidence fully returns.

XGIMI’s journey offers valuable lessons for tech companies navigating market transitions: Pivoting requires bold bets on emerging applications, but sustainable recovery demands diversified revenue streams. As the company prepares for its Hong Kong listing, investors should monitor automotive segment margins and non-Huawei customer acquisition. Industry watchers recommend scrutinizing Q3 delivery figures for HarmonyOS vehicles featuring XGIMI systems – the truest indicator of whether this projection pioneer has truly escaped its trough.