Xiaomi Reports Q2 Margin Slump, EV Losses Grow

Xiaomi’s smartphone margins declined to 8.5% as higher memory costs squeezed profitability, even as the average selling price rose 25.9% to a record 1,351 yuan and shipments fell 26.5% to 31.2 million units. Revenue and adjusted profit missed forecasts, with costs from memory, stronger competition, and geopolitical uncertainty weighing on the group. The company’s EV and AI-driven initiatives continued to incur losses in Q2, though EV revenue rose about 15.9% year over year and deliveries reached 104,199 vehicles, up 28.2% from a year earlier. For the first half of 2026, Xiaomi’s net profit dropped 37.6% year over year to 14.2 billion yuan, while revenue fell 8.4% to 208.06 billion yuan, and adjusted net profit declined 42.8% to 12.29 billion yuan. Smartphone×AIoT revenue slipped 11.3% in the quarter, even as the company benefited from higher prices; the EV segment, while growing, remains a drag on overall profitability. The results underline Xiaomi’s two-speed challenge: boosting margins on low-cost phones and achieving scale and profitability in its new-energy and AI initiatives to offset ongoing hardware pressures.