Xiaomi Reports Q2 2026 Earnings: Memory Component Costs Weigh on Smartphone Margins as EV Division ExpandsXiaomi has released its financial results for the second quarter of 2026, posting a year-over-year revenue decline amid industry-wide supply chain cost pressures. Total quarterly revenue fell 6% to 108.92 billion yuan, while net profit dropped 20% to 9.46 billion yuan. The earnings contraction was primarily driven by sharply lower gross margins, heavily impacted by rising memory component costs affecting smartphone manufacturers globally.
Smartphone shipments experienced a significant volume reduction, falling 26% year-over-year to 31.2 million units. Xiaomi attributed this drop to a strategic decision to curtail production in low-to-mid-range smartphone segments to mitigate surging memory chip expenses. Correspondingly, smartphone revenue declined 7% to 42.12 billion yuan, with a net profit margin of 8.5%, though the company maintained its position as the world's third-largest smartphone vendor by global market share.
The IoT and lifestyle products division encompassing smart home appliances also faced headwinds, with revenue decreasing 19% to 31.28 billion yuan due to softer domestic demand in China.
In contrast, Xiaomi’s Electric Vehicle (EV) business served as a bright spot, continuing its rapid upward trajectory. EV revenue grew 16% sequentially to 23.9 billion yuan, powered by increased delivery volumes totaling 81,302 vehicles. While the average selling price per car declined due to a shifting mix favoring the Xiaomi SU7 lineup, the company remains steadfast in its ambitious annual target of 550,000 vehicle deliveries for the year, having completed roughly one-third of that goal through the first six months.
The impact of memory supply constraints on consumer electronics: The sudden surge in DRAM and NAND flash prices, driven by the high demand for enterprise AI servers utilizing manufacturing capacity, has disproportionately affected low-to-mid-range smartphone manufacturers. Since budget and mid-range phones have very low hardware profit margins, bearing the higher memory costs forces manufacturers like Xiaomi to intentionally raise retail prices or reduce production volumes on their cheaper models to maintain profitability.
Instead of engaging in a price war in the saturated budget segment, Xiaomi is leveraging its push for premium smartphones and electric vehicle integration to safeguard long-term profits. Even with declining traditional hardware shipments, the expansion of its ecosystem and software services has helped stabilize the company's overall performance during supply chain shortages.
The delivery of over 81,000 vehicles in a single quarter underscores Xiaomi's rapid expansion of its automotive manufacturing base since entering the electric vehicle market. Achieving its full-year target of 550,000 vehicles will require a significant acceleration of component production in the second half of the year, making supply chain operations for battery cells and automotive semiconductors a key bottleneck to watch.
Source: Xiaomi
Xiaomi Reports Q2 2026 Earnings: Memory Component Costs Weigh on Smartphone Margins as EV Division ExpandsXiaomi has released its financial results for the second quarter of 2026, posting a year-over-year revenue decline amid industry-wide supply chain cost pressures. Total quarterly revenue fell 6% to 108.92 billion yuan, while net profit dropped 20% to 9.46 billion yuan. The earnings contraction was primarily driven by sharply lower gross margins, heavily impacted by rising memory component costs affecting smartphone manufacturers globally.
Smartphone shipments experienced a significant volume reduction, falling 26% year-over-year to 31.2 million units. Xiaomi attributed this drop to a strategic decision to curtail production in low-to-mid-range smartphone segments to mitigate surging memory chip expenses. Correspondingly, smartphone revenue declined 7% to 42.12 billion yuan, with a net profit margin of 8.5%, though the company maintained its position as the world's third-largest smartphone vendor by global market share.
The IoT and lifestyle products division encompassing smart home appliances also faced headwinds, with revenue decreasing 19% to 31.28 billion yuan due to softer domestic demand in China.
In contrast, Xiaomi’s Electric Vehicle (EV) business served as a bright spot, continuing its rapid upward trajectory. EV revenue grew 16% sequentially to 23.9 billion yuan, powered by increased delivery volumes totaling 81,302 vehicles. While the average selling price per car declined due to a shifting mix favoring the Xiaomi SU7 lineup, the company remains steadfast in its ambitious annual target of 550,000 vehicle deliveries for the year, having completed roughly one-third of that goal through the first six months.
The impact of memory supply constraints on consumer electronics: The sudden surge in DRAM and NAND flash prices, driven by the high demand for enterprise AI servers utilizing manufacturing capacity, has disproportionately affected low-to-mid-range smartphone manufacturers. Since budget and mid-range phones have very low hardware profit margins, bearing the higher memory costs forces manufacturers like Xiaomi to intentionally raise retail prices or reduce production volumes on their cheaper models to maintain profitability.
Instead of engaging in a price war in the saturated budget segment, Xiaomi is leveraging its push for premium smartphones and electric vehicle integration to safeguard long-term profits. Even with declining traditional hardware shipments, the expansion of its ecosystem and software services has helped stabilize the company's overall performance during supply chain shortages.
The delivery of over 81,000 vehicles in a single quarter underscores Xiaomi's rapid expansion of its automotive manufacturing base since entering the electric vehicle market. Achieving its full-year target of 550,000 vehicles will require a significant acceleration of component production in the second half of the year, making supply chain operations for battery cells and automotive semiconductors a key bottleneck to watch.
Source: Xiaomi
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