Xiaomi Looks Overseas for Growth as Costs, Domestic Competition Weigh
By Reuters | 26 May, 2026

After posting a 43% slump in first-quarter net profit due to higher costs for memory and other components, Xiaomi said it would push its smartphones and EVs deeper into overseas markets.

China's Xiaomi Corp posted a 43% slump in first-quarter net profit on Tuesday and said it would push deeper into overseas markets as higher memory and other component costs and domestic competition squeezed its smartphone business.

The Chinese smartphone and electric-vehicle maker reported 6.1 billion yuan ($899 million) adjusted net profit for the January-March period.

That compared with the average analyst estimate of 6.4 billion yuan, according to LSEG data.

On a post-earnings call, Xiaomi said it would expand further in overseas markets as part of efforts to offset higher component costs and tougher competition.

Xiaomi President William Lu said the industry had to adapt to a "new normal" of higher memory costs, though the increase in memory costs is expected to narrow from the third quarter.

Xiaomi is investing heavily in electric vehicles and artificial intelligence, seeking new revenue drivers beyond its core handset business.

Its EV business is growing and contributing more to income but still dragging on earnings because of heavy investment and lower margins.

The company reported 19 billion yuan in revenue for its EV business for the first quarter, up 5.1% from a year ago.

The loss from operations related to its EV, AI and other new initiatives reached 3.1 billion yuan.

In the first quarter, Xiaomi delivered 80,856 EVs, down 44.3% from 145,115 EVs in the fourth quarter. Deliveries were up 6.6% from a year earlier.

Xiaomi said first-quarter revenue was 99.1 billion yuan - slightly below analysts' average estimate of 103.4 billion yuan.

Last week, the company released a new, cheaper standard version of its flagship YU7 SUV series, starting at 233,500 yuan, about 8% lower than the previous version, stepping up pressure on Tesla in China's competitive but slowing car market.

Chinese automakers are now targeting expansion abroad, where demand for lower-cost EVs has grown. Xiaomi plans to enter European markets in 2027.

The world's No. 3 smartphone maker shipped 33.8 million smartphone units in the quarter, down 19% from a year ago, marking the steepest decline among the top five global brands, according to research firm Omdia.

Xiaomi's smartphone revenue fell 12.5% year-on-year to 44.3 billion yuan, while its smartphone gross margin dropped to 10.1% from 12.4% a year earlier, mainly due to higher key component prices and increased competition in mainland China.

The smartphone market outlook for 2026 remains weak as the memory chip crunch may last until late 2027 and Middle ​East tensions weigh on consumer sentiment, Counterpoint Research has said.

Shares of Hong Kong-listed Xiaomi closed down 0.8% at HK$29.76.

($1 = 6.7855 Chinese yuan renminbi)

(Reporting by Ju-min Park; Editing by Bernadette Baum, Keith Weir and Hugh Lawson)