Xiaomi's Profit Buckles as Memory Prices Soar

By Jiahui Huang

Xiaomi had a rough start to the year, posting another profit drop as the memory crunch, stiff competition and soft demand hurt its businesses, from smartphones to electric cars.

The Beijing-based company's net profit slumped 57% to 4.72 billion yuan in the first quarter, equivalent to $694.7 million. Revenue fell 11% to 99.14 billion yuan.

Analysts were expecting net profit of 5.64 billion yuan on revenue of 99.52 billion yuan, according to a Visible Alpha poll.

The sluggish performance underscores the various challenges facing Xiaomi as it continues its pivot into electric vehicles and smart devices: As the artificial-intelligence boom keeps gobbling up memory supply, higher costs are eating into smartphone profit margins. At the same time, its auto segment is contending with an industry-wide slowdown in China, and its home-appliance business is facing weaker demand as the boost from government subsidies fades.

Revenue from its smartphone business fell 12.5% to 44.3 billion yuan during the three-month period, a result Xiaomi attributed to lower shipments, partially offset by higher average selling prices. Its smartphone gross margin dropped to 10.1% due to higher prices of key components and intensified competition in the mainland market.

Its Internet-of-Things and lifestyle products segment--which includes washing machines, vacuums and other appliances--was the worst performer. Segment revenue declined 24% to 24.7 billion yuan as lower mainland revenue owing to a reduction in government subsidies offset higher revenue in overseas markets, the company said. The division's gross margin was stable at 25.2%.

The company's EV business--its newest and fastest-growing division--fared better. Revenue rose 5.1% to 19.0 billion yuan, thanks to higher vehicle deliveries that outweighed lower selling prices.

Xiaomi's gross profit margin dropped to 22.0% for the quarter from 22.8% a year earlier.

Shares finished the day 0.8% lower ahead of the earnings, taking year-to-date declines to 24%.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

May 26, 2026 06:19 ET (10:19 GMT)