Chinese technology giant Xiaomi posted weaker-than-expected results for the first quarter of 2026 as higher memory chip prices and slowing smartphone demand continued to hurt the business. The company’s net income fell 57% year-on-year to 4.72 billion yuan (around $695 million) in the January-March period, a bigger decline than analysts had projected. Adjusted net profit, which excludes certain one-time items, also declined 43.1% year-on-year to 6.07 billion yuan. Meanwhile, revenue dropped 11% to 99.14 billion yuan.
The weak results showed a combination of rising semiconductor costs, slowing consumer demand, and intense competition across China’s technology sector. Xiaomi’s core smartphone business remained under heavy pressure as global memory prices surged due to booming AI infrastructure demand.
Xiaomi’s revenue from smartphones dropped 12.5% to 44.3 billion yuan during the quarter as shipments declined sharply. The company shipped 33.8 million smartphones globally, down 19% from a year earlier. That represented the steepest decline among the world’s five largest smartphone brands. Xiaomi’s smartphone gross margin also fell from 12.4% a year ago to 10.1%, showing higher component costs and aggressive price competition in China’s Android market. While average selling prices increased slightly, they were not enough to offset lower shipment volumes and rising production expenses.
The pressure extended beyond smartphones into Xiaomi’s broader consumer electronics business. Revenue from its Internet-of-Things and lifestyle products division – which includes televisions, smart appliances, washing machines, vacuum cleaners, wearables, and connected home devices – fell 24% to 24.7 billion yuan. Xiaomi attributed much of the slowdown to weaker domestic demand in China after government subsidy programs for consumer appliances were reduced.
At the same time, Xiaomi continues to invest heavily in electric vehicles and AI as part of its long-term strategy to diversify beyond smartphones. The company’s EV business generated around 19.86 billion yuan in quarterly revenue, up 6.9% from a year earlier, supported by higher vehicle deliveries. Xiaomi delivered 80,856 electric vehicles during the quarter, although deliveries dropped more than 44% compared with the previous quarter as China’s EV market became increasingly competitive. The division still recorded heavy operating losses of around 3.1 billion yuan because of high expansion costs, aggressive pricing, and ongoing investments in manufacturing capacity, AI software, and autonomous driving systems.
It is worth noting that competition inside China’s EV industry has intensified rapidly over the past year. Automakers, including BYD, Tesla, Nio, XPeng, and Li Auto, have been engaged in repeated price cuts to defend market share in a slowing economy. In response, Xiaomi also recently launched a cheaper standard version of its flagship YU7 SUV priced at 233,500 yuan, about 8% lower than earlier variants.
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Ashutosh is a Senior Writer at The Tech Portal, largely reporting on new tech, and intersection of technology and business. Ashutosh’s career spans across nearly a decade of technology writing across multiple platforms and languages.
