Xiaomi Has Another Weak Quarter Amid Memory-Price Hikes, Slow Demand

By Jiahui Huang

Xiaomi reported another soft quarter as higher memory costs and intense competition weighed on its bottom line, and it remained unclear whether its fast-growing electric-vehicle business can translate sales growth into sustainable profitability.

The weak performance highlights the headwinds Xiaomi continues to face across its major businesses, with pricier memory chips still pressuring smartphone margins, and reduced consumer subsidies adding to already subdued demand in China's consumer-electronics market.

The Beijing-based company's net profit dropped 20.5% to 9.46 billion yuan, equivalent to $1.40 billion, in the second quarter. Revenue also weakened, declining 6.1% to 108.92 billion yuan, it said Tuesday.

Analysts had expected net profit of 6.01 billion yuan on revenue of 109.82 billion yuan, according to a Visible Alpha consensus estimate.

Revenue from its smartphone business fell 7.5% to 42.1 billion yuan during the period, a result Xiaomi attributed to lower shipments, though higher average product selling prices cushioned the impact. Its smartphone gross margin deteriorated to 8.5% from 11.5% due to higher prices of key components.

Its Internet-of-Things and lifestyle products segment--which includes washing machines, vacuums and other appliances--was also weak. Segment sales dropped 19% to 31.3 billion yuan due to lower revenue in the mainland market resulting from reduced national subsidies, the company said. The division's gross margin fell to 20.1% from 22.5% a year earlier.

Revenue from internet services edged 0.6% lower to 9.0 billion yuan, though segment gross margin rose to 76.8% from 75.4%.

The company's EV business--its newest and fastest-growing division--bucked the declining trend. Revenue climbed 16% to 23.9 billion yuan as higher deliveries offset lower vehicle selling prices.

The average selling price of a Xiaomi EV fell 9.6% to 229,312 yuan in the second quarter, mainly due to lower contribution from deliveries of the SU7 Ultra.

Overall gross margin for the three months ended June was 19.8%, declining from 22.5% a year earlier.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

August 18, 2026 06:25 ET (10:25 GMT)