Xiaomi is selling more electric vehicles, but its much larger smartphone business is moving in the opposite direction.
The Chinese electronics maker reported revenue of RMB 108.9 billion (USD 16.2 billion) for the second quarter of 2026, down 6.1% year-on-year (YoY). Adjusted net profit fell 42.6% to RMB 6.2 billion (USD 920 million), while reported profit declined 20.3% to RMB 9.5 billion (USD 1.4 billion).
At the center of the decline was Xiaomi’s smartphone business. Revenue from the segment fell 7.5% to RMB 42.1 billion (USD 6.2 billion), as shipments dropped 26.5% to 31.2 million units.
Xiaomi attributed the decline partly to adjustments in its product portfolio, which reduced shipments of midrange and lower-end models. It also pointed to weaker global demand as prices of key components, particularly memory, continued to rise.
The pressure was also visible in margins. Gross margin for Xiaomi’s smartphone business narrowed to 8.5% from 11.5% a year earlier, even as its average selling price rose 25.9% to a record RMB 1,351 (USD 200.5) per handset.
Xiaomi’s shipment decline was considerably steeper than that of the broader market. Global smartphone shipments fell 6% YoY in the second quarter, according to Omdia, compared with a 26% drop for Xiaomi. Samsung’s shipments increased 5% over the same period, while Apple’s rose 23%.
The disparity was also visible in China. IDC data showed Xiaomi’s smartphone shipments in mainland China falling 21.7% YoY during the quarter, compared with a 4.3% contraction for the overall market. Oppo and Vivo recorded declines of 9.7% and 11.4%, respectively, while Huawei and Apple posted growth of 19.4% and 24.4%.
Xiaomi’s newer businesses are accounting for a larger share of revenue. Its smart EV, artificial intelligence, and other new initiatives generated RMB 24.9 billion (USD 3.7 billion) in revenue during the quarter, up 17.1% YoY and equivalent to nearly 23% of group revenue.
Most of that came from EVs. Xiaomi booked RMB 23.9 billion (USD 3.5 billion) in smart EV revenue and delivered 104,199 vehicles, up 28.2% from a year earlier.
That volume put Xiaomi close to several established Chinese EV specialists. Nio delivered 107,658 vehicles in the second quarter, while Xpeng delivered 103,295 and Li Auto 98,330. Less than two years after beginning vehicle deliveries, Xiaomi therefore shipped roughly as many vehicles during the quarter as companies focused primarily on the EV market.
The new business, however, has yet to become profitable. Xiaomi’s smart EV, AI, and other new initiatives recorded an operating loss of RMB 2.6 billion (USD 385.8 million) for the quarter.
Smartphones remain Xiaomi’s largest source of revenue, but the business is contending with higher component costs and weaker shipments. EVs, meanwhile, are growing quickly enough to account for a larger share of the company’s revenue, although the broader new initiatives segment remains loss-making.
Xiaomi released its results on August 18, after the Hong Kong market had closed. Its shares rose 4.8% to HKD 27.44 (USD 3.5) in the first trading session after the announcement on August 19 and extended those gains in the following sessions. The stock was trading at around HKD 28.48 (USD 3.6) on the morning of August 21, up about 2.6% from its August 20 close and roughly 8.7% from its pre-earnings close.
Note: HKD, RMB figures are converted to USD at rates of HKD 7.84 = USD 1 and RMB 6.74 = USD 1 based on estimates as of August 21, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.