Xiaomi Reports Sharp Q1 2026 Profit Drop Amid Rising Memory Chip Costs

Xiaomi posted a significant drop in net income for the first quarter of 2026, impacted mainly by rising memory chip prices that hit its smartphone business. The company’s net income fell 43% to 6.1 billion yuan on an adjusted basis, according to The Edge Malaysia, while Bloomberg reported a 57% drop to 4.72 billion yuan, reflecting a divergence in figures but a clear downward trend ^{[1, 2]}.

Revenue declined for the first time in nearly three years. It fell about 11% year-on-year to around 99 billion yuan in Q1, marking a notable reversal in Xiaomi’s growth after years of expansion ^{[1, 2]}. The smartphone segment saw a 12.5% revenue drop to 44.3 billion yuan. This was accompanied by a steep 19% year-on-year fall in shipments to 33.8 million units, the largest decline among the top five global smartphone brands ^[2]. Higher component costs and intense competition cut the smartphone gross margin to 10.1%, down from 12.4% in the prior year ^[2].

Xiaomi’s electric vehicle (EV) business showed mixed results. Revenue increased 5.1% year-on-year to 19 billion yuan, reflecting continued growth in the division ^[2]. However, deliveries totaled 80,856 units, down 44.3% from the previous quarter, though still up 6.6% compared to the prior year ^[2]. The company reported operating losses of 3.1 billion yuan in Q1 tied to investments in EV, artificial intelligence, and other new areas, reflecting ongoing costs in building these businesses ^[2].

Early in 2026, Xiaomi launched a cheaper version of its YU7 SUV, priced about 8% lower than its predecessor. The move aims to enhance competitiveness against Tesla in China’s electric vehicle market ^[2]. The company also plans to expand its EV sales into European markets starting in 2027 ^[2].

Xiaomi’s Q1 2026 financial performance highlights challenges in smartphone profitability due to memory chip inflation and market competition, while its EV business is investing heavily amid delivery fluctuations. Reporting on these results emerged in late May 2026, detailing the full extent of Xiaomi’s first-quarter outcomes ^{[1, 2]}.