Xiaomi Reports Record Smartphone Pricing Amid Memory Cost Pressures
The Chinese tech giant delivered 104,199 vehicles in Q2 while advancing its AI model capabilities, though component costs weighed on margins.
Revenue Declines as Memory Costs Bite
Xiaomi Corporation reported total revenue of RMB 108.9 billion ($15.1 billion) for the second quarter of 2026, with adjusted net profit of RMB 6.2 billion, as the company navigated what President William Lu described as a "challenging" external environment marked by elevated component costs and slow consumer demand (earnings call, 2026-08-18).
The Hong Kong-listed company, with a market capitalization of approximately $85 billion, maintained its position among the top three global smartphone makers for the 24th consecutive quarter despite lower shipment volumes. Smartphone revenue reached RMB 42.1 billion on shipments of 31.2 million units, representing 38.7% of total revenue.
Record Pricing Offsets Margin Pressure
Xiaomi achieved a record-high average selling price for smartphones as it "proactively optimized" its product structure, though gross margin in the segment compressed to 8.5% for the quarter and 9.3% for the first half as memory costs remained "at historically high levels" (earnings call, 2026-08-18).
CFO Alain Lam noted that high-end smartphone sales in Mainland China reached 32.1% of total smartphone sales, also a record. The company ranked second in Southeast Asia, Latin America, and the Middle East with market shares of 19.3%, 16.2%, and 13.5% respectively.
IoT Revenue Falls on Subsidy Comparisons
The Internet of Things business generated RMB 31.3 billion in revenue, declining year-over-year due to what Lu called the "high base effect of national subsidy in Chinese market last year." However, overseas revenue increased significantly, supported by the opening of more than 640 new retail stores internationally as of June 30. Xiaomi tablets ranked fourth globally in the quarter, while TWS earbuds and wearable products both ranked second worldwide (earnings call, 2026-08-18).
Internet services revenue totaled RMB 9 billion with a 76.8% gross margin, up 1.4 percentage points year-over-year. Global monthly active users reached 770 million, up 4.8%, with Mainland China MAUs hitting a record 198 million.
EV Deliveries Surpass Half-Million Mark
The Smart EV, AI and other new initiatives segment posted revenue of RMB 24.9 billion, accounting for 23% of group revenue. Xiaomi delivered 104,199 vehicles in Q2, marking "the sixth consecutive quarter of year-on-year growth," with cumulative SU7 series deliveries exceeding 500,000 units as of August 17 (earnings call, 2026-08-18).
The company unveiled its Quinlan extended-range vehicle architecture in July, launching the SkyNomad N90 Max and N70 Max SUVs with presale prices of RMB 299,900 and RMB 259,900. The segment recorded an operating loss of RMB 2.6 billion as the company increased AI investment.
AI Model Gains Traction
Xiaomi's MiMo V2.5 large language model topped global rankings in early August, with its "core volume" increasing more than sixfold from 1.5 trillion to 10.5 trillion tokens in two months, according to CCTV reporting cited by Lu. The company's API calls and token plan "began contributing revenue this quarter" for the first time (earnings call, 2026-08-18).
R&D expenses rose 18.9% year-over-year to RMB 9.2 billion for the quarter. Lu acknowledged that "storage costs will remain high" and "consumer demand recovery will take time" in Q3, but said the company remains committed to investing in "hardcore technologies such as AI chips, operating system and embodied intelligence" (earnings call, 2026-08-18).
MarginX data shows recent insider purchases by co-founder Bin Lin totaling over 4.1 million shares.
This article was generated by MarginX from the earnings call on 2026-08-18. It is not investment advice.