AI: From 'Optional' to 'Standard' – Daily Interactions Hit 150 Million
Mid-year financial results serve as a “touchstone” for testing corporate growth potential, clearly revealing which companies have truly gained support from downstream customers with real investment and achieved large-scale commercial implementation.Recently, Tuya Smart (NYSE: TUYA / HKEX: 2391), an AI cloud platform service provider, released its 2025 interim financial report. The report, with its robust operating data and financial performance, provides a window into the deep integration of AI technology and the real economy. The data shows that the company’s total revenue in the first half of the year increased by 14.7% year-on-year, and net profit margin rose to 15.2%. Additionally, in the second quarter, the company achieved GAAP operating profitability (the strictest profitability criterion) for the first time in a single quarter, with operating profit increasing by approximately US$11.4 million year-on-year.Most notably, the shipment proportion of products equipped with AI capabilities reached 93.05%, clearly demonstrating that artificial intelligence is moving from cloud computing power to the physical world of the Internet of Things — and Tuya serves as a key driver in this transformation process.01AI Penetration Rate at 93%, Daily Interactions Surpassing 150 MillionAccording to Tuya’s interim results, the company’s total revenue during the reporting period reached US$154.8 million, up 14.7% year-on-year. All three business segments — PaaS (Platform as a Service), SaaS (Software as a Service) and others, and Smart Solutions — achieved double-digit growth. However, one core data point holds greater strategic significance than revenue growth: as of June 30, 2025, the shipment volume of product categories equipped with AI capabilities accounted for an astonishing 93.05% of Tuya’s total shipments. This figure indicates that AI is no longer a conceptual exploration but has become large-scale Physical AI applications. Leaders like Tuya have become core drivers and beneficiaries of this transformation.From the market demand perspective, this means AI functions are gradually evolving from “optional” features to mainstream “standard” ones. In over 90% of shipment scenarios, AI is no longer a flashy marketing gimmick but has become the “soul” of devices. Consumers and enterprises are no longer satisfied with simple networked control; their demand for intelligence, autonomous decision-making, and scenario understanding has become the standard. This means that the vast majority of devices produced on Tuya’s platform — from smart home appliances and wearable devices to industrial sensors now possess the ability to perceive, analyze, and even make independent decisions, serving as the “nerve endings” for AI integration into the physical world.Amid the current global economic volatility, the conventional optional consumer electronics sector is generally pursuing “cost-effectiveness,” with many enterprises attempting to reverse downturns by sacrificing prices for sales volume. This has led to weak demand across the industrial chain. However, it is important not to overlook the enormous structural demand brought by AI: forward-thinking enterprises and consumers are discovering that the unprecedented value-added experiences and functional innovation brought by continuously evolving AI capabilities, combined with the growing adoption of AI terminals among end-users, have quietly built dual barriers of value and competition. Tuya’s high penetration rate indicates that demand for AI has reached the critical “must-have standard” threshold.AI adoption goes far beyond “equipping” devices; it lies in the interactive vitality stimulated by its deep integration into daily life scenarios. Tuya’s AI Developer Platform provides AI Agent services, with daily AI interactions for global users exceeding 150 million. Behind this massive number is the high-frequency and in-depth application of AI technology in daily scenarios of global users. Whether through the cross-language “AI Translation” assistant, personalized “AI Health” advice for health monitoring, the “AI Energy” manager for optimizing energy consumption, “AI Pet Care” and “AI Trendy Toys” for emotional companionship, or “AI Security” and “AI Robots” for enhancing safety — Tuya’s AI Agent development platform helps developers endow their hardware with “service attributes.”Physical AI prosperity cannot be achieved without the broad participation of hardware manufacturers, developers, and industry users. In the first half of 2025, the number of registered developers on Tuya’s AI Developer Platform exceeded 1.514 million, up 15% compared to the end of 2024. The platform served 4,100 customers worldwide, with a consecutive 12-month PaaS net expansion rate of 114%. This reflects that repurchases and increased purchases by existing customers continue to drive revenue growth, demonstrating significant ecological vitality.02Reducing AI Hardware Development Barriers, Creating a Comprehensive EcosystemCurrently, the global AI hardware market is booming at unprecedented speed. Despite this industry boom, AI hardware development has historically been a “privilege” of corporate giants, requiring huge capital investment, deep technical expertise, and long development cycles. Individual developers and small entrepreneurial teams often shy away due to high barriers; even when they successfully develop products, large-scale production and market promotion become new obstacles. Many innovative projects fade away on the path from prototype to commercial product.Facing these pain points, Tuya has become a game-changer in the industry. Based on its TuyaOpen open-source framework, Tuya has successfully built a comprehensive innovative ecosystem spanning technical support, developer empowerment, product incubation, and commercial implementation.First, TuyaOpen provides low-code development tools, multimodal AI capability integration, large-model support, and robust security and compliance guarantees. This greatly reduces development complexity, enabling developers to quickly transform ideas into products.Second, through cross-platform and multi-protocol support, ecological collaboration mechanisms, and an active open-source community, TuyaOpen breaks down ecological silos, connecting global developers, suppliers, manufacturers, and distributors to form a powerful ecosystem of resource sharing and collaborative development.Breaking technical barriers to make AI development accessible — this capability of Tuya is intuitively reflected in its related maker activities. For example, at AdventureX 2025, China’s largest hackathon to date, Tuya led the organization of the AI hardware track. Young participants utilized Tuya’s development tools such as the T5 development board and general AI Agent engines including the TuyaOpen open-source framework and AI Agent development platform to build multimodal AI products with perception and action capabilities.Furthermore, at the commercial level, TuyaOpen bridges the complete loop from code to commercial monetization, accelerating product incubation and market promotion. Tuya launched a series of subsidy programs by joining hands with ecological partners, providing support for rapid product deployment in areas such as technology development, ecological integration, product manufacturing, and marketing promotion. Currently, TuyaOpen has integrated top-tier models such as OpenAI, Gemini, Claude, Amazon Nova, and Deepseek.It is evident that on the eve of the AI hardware boom, Tuya is driving a genuine AI accessibility revolution by lowering development barriers and accelerating commercialization. Through the TuyaOpen open-source framework and other initiatives, Tuya not only provides developers with strong technical support but also offers comprehensive support from concept to market through ecosystem co-building strategies, helping accelerate the arrival of an era where “everything can be AI-enabled, and everyone can leverage AI.”03An Evolving AI Hardware Innovation Ecosystem Unlocking New Value Opportunities in Physical AI EraWith the advent of the Physical AI era, the wave of intelligence is sweeping the globe with unstoppable momentum.Against this backdrop, Tuya leverages its powerful technology platform and ecosystem to actively promote the development and application of Physical AI, helping more innovative projects move from concept to market and bringing new opportunities and challenges to the industry.As seen above, Tuya has jointly organized multiple hackathon-themed online and offline innovation activities with ecological partners, incubating hundreds of AI hardware prototypes with commercial potential. These projects continue to explore feasible paths for seamlessly integrating AI into hundreds of millions of households and commercial scenarios worldwide, achieving a closed-loop advancement from technology release to ecosystem co-creation and from proof-of-concept to large-scale application.Tuya has also achieved remarkable results in promoting the commercialization of maker projects. For example, the Otto Robot project initiated by the community not only introduced agents for marketing and promotion but also drove the popularization and application of its T5 development board. Additionally, the cooperation with the ALIENTEK OpenEdv community integrates AI hardware development into university courses and embedded developer programs, enabling developers to practice AI applications during their learning phase. Through these initiatives, Tuya not only provides technical support for entrepreneurs but also builds bridges to the market, accelerating the commercialization process of innovative projects.Meanwhile, Tuya will actively seek investment opportunities in high-potential AI projects and provide comprehensive support covering key areas such as technology R&D, market promotion, and channel expansion. This approach enables developers to focus more on product innovation and user experience optimization while leveraging ecological synergy effects to open broader market opportunities and create development possibilities for cooperative projects.It is clear that in the future development of AI hardware, Tuya is committed to becoming the fertile soil for this innovation ecosystem, nurturing the growth and prosperity of countless hardware devices. In this process, Tuya not only provides developers with a low-barrier and high-efficiency development platform but also ensures the sustainable development of the ecosystem and the maximization of commercial value.For instance, Tuya promotes the healthy development of its ecosystem through a diversified and complementary business model, including its PaaS revenue (device intelligence revenue covering three touchpoints — device, cloud, and interaction — with products such as AI modules, cloud services, and Apps), smart solution revenue featuring the integration of hardware and software, and various SaaS revenues serving end-users or spatial scenario applications. These revenues not only provide Tuya with a continuous and stable cash flow but also, through mutual interaction and synergy, attract more developers and enterprises to join its prosperous ecosystem, jointly promoting the development of AI hardware. This approach ensures Tuya maintains organic growth capabilities, laying a solid foundation for long-term innovation.Tuya also plays the role of a “standard integrator” in the industry. By integrating protocols and interfaces, it ensures compatibility and interoperability between devices. This standardization not only reduces development costs and improves efficiency but also provides users with seamless experiences.Finally, Tuya has achieved huge commercial dividends through network effects that continue to strengthen as more devices become connected to its ecosystem. This first-mover advantage not only brings more users and developers to Tuya but also consolidates its leading position in the market. By capturing the dividends from network effects, Tuya can continue to invest in R&D and innovation, promoting the continuous evolution of the ecosystem.It is anticipated that based on the dual-driver model of “technology platform + ecosystem co-construction,” Tuya is expected to continuously promote the large-scale implementation of Physical AI innovation. Simultaneously, this opens huge value opportunities for Tuya itself in the trillion-level AI hardware market.04Concluding RemarksTuya’s financial report not only reflects growth in key data points but also reveals its unique value as a platform-level enterprise in the Physical AI era.Just as platform enterprises such as Amazon and Google reaped the greatest development dividends after the wave of the Internet era, Tuya is now reaping positive feedback from its long-term strategic positioning on the eve of the AI hardware boom.From a financial perspective, while continuing its profitable trend this quarter, Tuya has achieved a balance between revenue growth and profit margin while demonstrating significant operating leverage effects — with relatively low marginal costs, it continues to drive the expansion of the global developer ecosystem, product iteration, and growth in AI interactions, thereby transforming “profitability” from a phased achievement to a sustainable long-term state.Sufficient cash reserves also provide ample resources for subsequent strategic initiatives, while the daily average of 150 million AI interactions verifies the vitality and commercial value of its platform ecosystem.More importantly, the ecosystem Tuya has created is becoming the infrastructure of the Physical AI era. By lowering development barriers through the TuyaOpen open-source framework and nurturing innovation through the global developer community, this multi-dimensional and comprehensive ecosystem empowerment capability constitutes its defensible competitive moat.As the AI hardware market exceeds the trillion-level scale, Tuya, as a platform hub connecting chip manufacturers, developers, brand owners, and end-users, is expected to continue enjoying the network effect dividends from ecosystem expansion. Its platform value is reflected not only in the AI empowerment of every piece of hardware, every space, every customer, or every end-user but also in helping developers accelerate industrial innovation and build future AI application scenarios.Historical experience from the Internet era shows that platform-level enterprises tend to obtain valuation premiums exceeding the industry average and sustained growth momentum. Tuya has already demonstrated similar characteristics in the more imaginative new track of Physical AI.As more and more AI hardware grows out of its ecosystem and integrates into thousands of industries, Tuya’s platform value will expand accordingly, ultimately achieving a value revaluation from a “tool provider” to an “ecosystem enabler.”
