BEIJING, August 18, 2026, 19:47 CST
- Adjusted net profit dropped 42.6% to RMB6.2 billion.
- Smartphone gross margin slipped to 8.5% with higher memory costs eating in.
- EV deliveries jumped 28.2%, while new initiatives booked a RMB2.6 billion loss.
Xiaomi Corporation (HKG:1810) saw smartphone margins take a hit Tuesday, with rising memory costs weighing on cheaper models. Gains from its electric vehicle business haven’t caught up to offset the squeeze in the wider group’s earnings.
Xiaomi faces a tough choice as the world’s third-biggest phone maker. Selling fewer cheap models helps margins but cuts into its big scale edge.
Average selling price for its phones jumped 25.9% to a record RMB1,351, but shipments dropped 26.5% to 31.2 million units.
| Group measure | Q2 2026 | Q2 2025 | Year-on-year |
|---|---|---|---|
| Revenue | RMB108.9bn | RMB116.0bn | -6.1% |
| Gross profit | RMB21.6bn | RMB26.1bn | -17.2% |
| Reported net profit | RMB9.46bn | RMB11.87bn | -20.3% |
| Adjusted net profit | RMB6.22bn | RMB10.83bn | -42.6% |
Both revenue and adjusted profit came in under consensus from Reuters. Revenue missed by 2.9%, while adjusted profit lagged by 6.1%.
| Measure | Reported | Analyst consensus | Shortfall |
|---|---|---|---|
| Revenue | RMB108.9bn | RMB112.2bn | RMB3.3bn |
| Adjusted net profit | RMB6.2bn | RMB6.6bn | RMB0.4bn |
Xiaomi said “significant increases in key component costs, including memory” were a headwind. The company mentioned stronger competition and geopolitical uncertainty too.
| Smartphone measure | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Shipments | 31.2m | 42.4m | -26.5% |
| Revenue | RMB42.1bn | RMB45.5bn | -7.5% |
| Average selling price | RMB1,351 | RMB1,073 | +25.9% |
| Gross margin | 8.5% | 11.5% | -3.0 points |
The change in product mix helped steady revenue, but profits still took a hit. Each RMB100 in phone sales brought in RMB8.50 of gross profit, down from RMB11.50 last year.
| Global vendor | Q2 shipments | Market share | Year-on-year |
|---|---|---|---|
| Samsung Electronics (KRX:005930) | 60.5m | 22% | up 5% |
| Apple (NASDAQ:AAPL) | 55.1m | 20% | up 23% |
| Xiaomi | 31.2m | 11% | down 26% |
| OPPO | 28.4m | 10% | down 17% |
| vivo | 21.5m | 8% | down 18% |
Omdia said over half of Xiaomi’s shipped phones are priced below $200, putting Xiaomi among the top five brands most at risk from higher memory prices. Research manager Le Xuan Chiew described it as a “structural repricing” for smartphones. Omdia market release
Cars delivered better figures. Smart EV revenue climbed 15.9% to RMB23.9 billion. Deliveries hit 104,199.
| EV measure | Q2 2026 | Q2 2025 | Year-on-year |
|---|---|---|---|
| Smart EV revenue | RMB23.9bn | RMB20.6bn | +15.9% |
| Vehicle deliveries | 104,199 | 81,302 | +28.2% |
| EV, AI and new-initiatives revenue | RMB24.9bn | RMB21.3bn | +17.1% |
| Segment operating result | RMB2.6bn loss | Not given | Not comparable |
The EV, AI and other initiatives business stayed in the red. Operating loss came in at RMB2.6 billion, about 12% of total gross profit for the group.
The company kept up spending. Research costs for the quarter jumped 18.9% to RMB9.2 billion and capex hit RMB3.6 billion.
Risks: Memory prices could stay elevated, keeping up the squeeze on entry-level phones. EV growth is still at risk from China’s weaker car sales and tough price cuts in the market.
Xiaomi’s quarter shows two sets of growth challenges. Phones have to boost margins, and the car side still lacks the scale for steady profit.
