Nicola Tangen, CEO of the Norwegian Sovereign Wealth Fund, interviews Ala Lema, CFO of Xiaomi, a global technology company founded in 2010. The Norwegian fund owns more than 1% of Xiaomi.

The conversation covers Xiaomi's rapid evolution from smartphone operating systems to a comprehensive ecosystem including phones, smart devices, electric vehicles, and AI models. Lema explains how the company achieved remarkable development speeds, launching their first smartphone in one year and their first electric vehicle in under three years.

They discuss Xiaomi's competitive advantages in China's advanced supply chain, their recent launch of a large language model, and the company's vision for physical AI integration across their billion-device ecosystem.

From Operating System to Smartphone in One Year

Xiaomi started in April 2010 building an operating system for smartphones on top of Android, then decided to make their own hardware.

"Our first smartphone, which we call Xiaomi 1, we sold it at 1999 RMB in China" - Ala, launched just one year after founding in 2011.

The rapid development was possible because "the supply chain is obviously quite advanced in China" while the market had "expensive products with very low quality."

Xiaomi's core philosophy emerged: "can we do a smartphone that is much better quality and we can offer to users at much more affordable prices?"

Electric Vehicle Development in Under Three Years

Xiaomi decided to enter the car industry in 2021 and launched their first vehicle in 2024, designing it and building a factory in less than three years.

The company had prior experience investing in EV manufacturers in China before developing their own vehicle.

"If you believe that a car, a EV, is going to be another piece of consumer electronics" - Ala, explaining their approach using existing expertise in software-hardware integration.

"Can we spend 10 times more investments to build the first car" - focusing all efforts on one vehicle instead of multiple directions.

AI Model Launch and Competitive Positioning

Xiaomi launched their own large language model two weeks before the interview, performing well on public scoring systems like openrouter.com.

Their pricing strategy positions between premium models like Claude and lower-cost Chinese alternatives, though specific costs aren't disclosed.

The company innovated on infrastructure and benefits from having "a big ecosystem that we can use to test" and collect user behavior data.

They released it as an open source model "to invite the best mind globally to help improve that model."

Physical AI Vision Across Billion-Device Ecosystem

Xiaomi operates over 1 billion connected devices globally with over 800 million mobile smartphone users.

Their AI strategy focuses on "physical AI world" - integrating AI into phones, smart appliances, and cars rather than just chatbots.

"How do we interconnect these devices so that we will enhance people's productivity in the physical AI world?" - Ala on their long-term vision.

The company achieved over 450 billion RMB in sales last year with strong profitability across their comprehensive ecosystem.