Xiaomi is going through a rough patch now, and that’s putting it mildly. The company posted its second-quarter net profit today, and a drop of 42.6% has been reported.
Memory price hikes have wiped out almost half of Xiaomi’s quarterly profit
Needless to say, that’s a huge loss for the company. Analysts were wrong, as the results are notably worse than predicted. Why? Well, you can easily guess it. Yes, the costs of memory and other components managed to hurt Xiaomi quite a bit.
The company reported a net profit of 6.2 billion yuan ($919.50 million) for the period from April to June 2026. That profit fell short of analyst estimates, which were 6.6 billion yuan. This is based on LSEG data, says Reuters.
“Significant increases in key component costs, including memory, along with intensified industry competition, continued to create headwinds for our business,” said Xiaomi.
Xiaomi’s smartphone revenue dropped 7.5% YoY
Q2 2026 revenue was 108.9 billion yuan, which is also short of the 112.2 billion yuan estimate. Xiaomi’s smartphone revenue fell 7.5% year-on-year to 42.1 billion yuan. Its smartphone gross margin declined to 8.5% from 11.5% a year before.
Xiaomi is still the world’s third-largest smartphone OEM. It shipped 31.2 million smartphones in Q2 2026, which is a 26% decrease from the year before. That’s a second consecutive decline for the company.
Considering that half of the company’s smartphone shipments are priced below $200, it was the most exposed and most hurt by the memory cost inflation, when the top 5 smartphone OEMs are concerned.
Reuters notes that Xiaomi is investing heavily in electric vehicles and AI, as it’s looking for growth opportunities. The smartphone market is its core, but it’s quite saturated, plus the component prices are out of control.
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