China's industrial revolution: AI-driven production at Xiaomi

China Market Insider – Series "China's AI Factories" Part 2 How AI Factories Are Transforming the Manufacturing Industry: Example Xiaomi

2026-01-07 From Henrik Bork | Translated by AI 4 min Reading Time

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China uses AI for concrete improvements in industrial production. In part two of our series, we illustrate this using the example of Xiaomi.

In our China Market Insider, we regularly provide you with relevant information directly from China.(Image: © Eisenhans - stock.adobe.com) — In our China Market Insider, we regularly provide you with relevant information directly from China.
(Image: © Eisenhans - stock.adobe.com)

Xiaomi's third AI factory began production this month. A new air conditioner is built there every 6.5 seconds. AI controls the robots. Very few workers and engineers, whether one likes it or not, are needed anymore.

The first phase of this "Xiaomi Smart Home Appliance Factory" was launched on December 11 in Wuhan, Central China, as recently announced by Xiaomi Group President Lu Weibing.

"Switched on" is probably a better expression here than "put into operation," as a central computer directs the movements of robots and analyzes all essential data in real time with artificial intelligence, enabling rapid corrections.

Consequently, electricity and algorithms are the heart of this futuristic factory hall, no longer the plant manager's office or the workers' canteen. Through the integration of AI, combined with consistent digitization of all processes, "a level of automation significantly above the industry standard has been achieved," writes Lu on his Weibo account.

Both the injection molding plant and the sheet metal processing plant have been 100 percent automated and operate under normal conditions without any human intervention. This achieves manufacturing tolerances of ±0.05 millimeters, says the Xiaomi manager.

AI also enables the autonomous driving AMRs ("autonomous mobile robots"), which transport materials within the factories. 94 percent of the logistics have been automated. Everything is controlled via a "Xiaomi Hyper Intelligent Manufacturing Platform" (Xiaomi Hyper IMP).

AI agents coordinate processes in various parts of the factory. However, the perhaps most important application of artificial intelligence, which transforms this plant in Wuhan from a "smart factory" into an AI factory, is in quality control. All key components of the air conditioners are analyzed in real time using AI. This allows for very rapid responses where problems arise.

"While traditional factories continue to rely on manual spot checks, we have introduced advanced AI technology," says Lu Weibing. "High-resolution image processing combined with AI models running directly on the devices handles the inspections. This not only increases efficiency but also enables 100-percent quality control of key components."

It is this ability for seamless quality control and continuous self-improvement of manufacturing processes that is expected to give Xiaomi's AI factories a competitive advantage over time. The factory in Wuhan is already the third AI factory of the company, which also produces smartphones and electric cars.

In the Xiaomi Smart Factory for smartphones in Changping near Beijing, a central "AI brain" already took over control of all production processes at the end of 2023 and continuously optimizes them. Lei Jun, the founder of Xiaomi, never tires of talking about it.

"The most impressive thing is that this platform can detect and solve problems while also contributing to improving the production process," says Lei Jun. "It's truly incredible. This platform literally blew our colleagues away at first sight."

One smartphone per second is completed in the AI factory in Changping, around the clock, as the AI and robots do not sleep, do not need weekends, and rarely take sick days. Initially, Xiaomi often referred to this factory as a "Dark Factory," an early example of a "lights-out factory." Cobots and other robots can navigate in the dark using their sensors and radar devices. The factory can operate entirely without lighting.

However, because many media outlets, especially in the western world, prefer to focus on the negative aspects of such innovations driven by AI and robotics in manufacturing industries, Xiaomi's PR department now talks about it a little less frequently. Factories with very few employees are still a taboo for many people.

While concerns about potential layoffs in the age of algorithms and humanoids are important and legitimate and should also be extensively discussed, Xiaomi undoubtedly deserves recognition for its pioneering achievements in advanced manufacturing. It is no exaggeration to say that the future of the manufacturing industry can already be observed today in these three factories.

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Date: 08.12.2025

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Unperturbed by criticism and the very high investment costs, Xiaomi is building one AI factory after another. On the other side of Beijing, in the suburb of Yizhuang, stands the "Xiaomi Auto Super Factory." There, an electric car rolls off the production line every 76 seconds since the first quarter of 2024.

Here, in the already "switched on" first phase of the new car factory in Beijing, you can still occasionally see an individual employee driving a forklift back and forth, but the majority of the work in the ultra-modern plant is carried out by more than 700 robots and 181 AMRs for logistics.

Factories like those of Xiaomi are "not just prototypes or experiments," writes Industrial Equipment News (IEN). "A new era of manufacturing is beginning in China," comments the respected U.S. trade journal for industrial equipment, full of recognition for the achievements of Xiaomi's engineers.

Experiments can no longer be spoken of since November 20 this year. On that day, the 500,000th electric car from Xiaomi rolled out of the factory in Yizhuang, Beijing, as reported by "Xinhua." From March 2024 to November 2025 – this first half-million represents a new world record for the ramp-up of an electric car production, wrote the official Chinese news agency.

With its three AI factories, Xiaomi demonstrates where the volume production of industrial goods is heading in the age of artificial intelligence. Manufacturing is becoming faster, more precise, and increasingly autonomous thanks to artificial intelligence.