On December 27th, Hong Kong's stock market witnessed a noteworthy performance, with all three major indices recording gains by the end of the morning sessionThe Hang Seng Index increased by 0.12%, while the Hang Seng Tech Index saw a rise of 1.2%. Notably, shares of Xiaomi Group surged by 5.5%, reaching HK$34.55, marking the highest price point of the year, inching closer to its historical peak since it was listedMeanwhile, Kingsoft Cloud, recognized as a concept stock of Xiaomi, experienced a staggering intra-day increase of over 40%, ultimately closing up by 33.69% at HK$6.19.

Industry rumors surfaced on December 26th, suggesting that Xiaomi Group is working on establishing a vast GPU cluster to support the construction of large AI modelsAs of the report's release, there had been no official comment from Xiaomi on this endeavorAt the Xiaomi Eco-Partner Conference, which took place on the same day, President Lu Weibing announced anticipated R&D expenditures of CNY 24 billion in 2024 and CNY 30 billion in 2025. Over the span of five years, from 2022 to 2026, the estimated investment in R&D would exceed CNY 100 billion, primarily focusing on areas such as artificial intelligence (AI), operating systems (OS), and semiconductor technology.

A telecommunications industry analyst, Fu Liang, expressed to reporters that leading cloud service providers in China are actively engaged in building GPU clusters, and Xiaomi regards the large model initiative as a crucial pillar of its "smart home, vehicle and social" strategy

He noted that Xiaomi's approach towards the GPU cluster may differ from that of its competitors, specifically highlighting the need for efficient utilizationFu maintained that the construction itself poses no issues; however, the availability of core chip supplies is crucial in determining successAn investment professional echoed this sentiment, emphasizing that the establishment of computing power clusters is a requisite investment for top-tier companies in today’s competitive landscape.

Publicly available information reveals that Xiaomi's AI Laboratory officially established a large model team in April 2023, with Luan Jian appointed as the headThis team reports to Wang Bin, the head of the AI LabBy August 2023, Xiaomi’s large language model, known as MiLM, made its debut on prominent large model evaluation platforms such as C-Eval and CMMLUFast forward to May 2024, Xiaomi announced that MiLM officially passed the large model registration, with plans to gradually integrate it into various products, including Xiaomi’s vehicles, mobile phones, and smart home devices

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Furthermore, it was rumored that Luo Fuli, one of the key developers of the open-source large model DeepSeek-V2 from DeepSeek, a prominent AI company, joined Xiaomi and will lead their large model team; however, Xiaomi has yet to confirm this information.

During a Q3 earnings call, Lu Weibing highlighted AI as a pivotal topic that the company cannot overlook, commenting on how swiftly evolving AI technologies can significantly alter user experiencesHe emphasized that companies must invest in building robust foundational technology and long-term strategic layoutsFrom an infrastructure perspective, he described AIOS as the vital operating system that encompasses the full AI ecosystem, asserting that current operating systems do not sufficiently embody the attributes of a genuine AIOS, and failed to achieve a comprehensive capability in perception, memory, reasoning, and executionHe indicated that Xiaomi is poised to amplify its AI-related investments moving forward.

Notably, Xiaomi's founder Lei Jun has formulated a rather different approach to large models compared to many companies in the industry, focusing on lightweight and local deployment advancements

From a business standpoint, cloud-based large models necessitate substantial fees for utilization due to computational costs, whereas local edge computing maintains proximity to user data and, to some extent, minimizes cloud computing expenditure.

Furthermore, Kingsoft Cloud, which also observed a significant stock price increase today, reported during its Q3 2024 earnings call that its artificial intelligence business expanded to CNY 360 million, accounting for approximately 31% of its public cloud revenueThe company's full commitment to the Xiaomi and Kingsoft ecosystems, coupled with efforts to uncover tangible business opportunities across various domains, from electric vehicles to large language models and WPS AI, has led to a dramatic year-on-year revenue growth of 36%.