Chinese technology giant Xiaomi reported a steep decline in first-quarter earnings as weakness in its smartphone business and heavy spending on electric vehicles and artificial intelligence weighed on results.
The company said adjusted net profit fell 43% to 6.1 billion yuan ($899 million) during the January-to-March quarter, missing analyst expectations of 6.4 billion yuan, according to LSEG data.
Quarterly revenue totaled 99.1 billion yuan, also coming in below market forecasts of 103.4 billion yuan.
Xiaomi’s smartphone division faced pressure from rising memory chip costs and intense competition in China’s consumer electronics market. Smartphone revenue declined 12.5% year over year to 44.3 billion yuan, while gross margins narrowed to 10.1% from 12.4% a year earlier.
The world’s third-largest smartphone maker shipped 33.8 million devices during the quarter, down 19% from a year earlier, marking the sharpest shipment decline among the global top five smartphone brands, according to research firm Omdia.
At the same time, Xiaomi continues investing aggressively in electric vehicles and artificial intelligence as it seeks to diversify beyond smartphones and build new long-term growth engines.
Its EV business generated 19 billion yuan in quarterly revenue, up 5.1% from a year ago. However, losses tied to EVs, AI, and other emerging businesses widened to 3.1 billion yuan.
Xiaomi delivered 80,856 electric vehicles in the first quarter, down sharply from the previous quarter but still slightly higher than the same period last year.
The company recently introduced a lower-priced version of its YU7 SUV series at 233,500 yuan, intensifying competition in China’s crowded electric vehicle market and adding pressure on rivals such as Tesla.
Chinese automakers are increasingly looking overseas for growth opportunities, targeting Europe, Latin America, Southeast Asia, and the Middle East as domestic competition intensifies and market growth slows. Xiaomi plans to begin entering European markets in 2027.
Industry analysts remain cautious on the outlook for the global smartphone sector. Research firms warn that ongoing memory chip shortages and geopolitical tensions could continue weighing on consumer demand through 2026 and beyond.
Shares of Xiaomi listed in Hong Kong closed 0.8% lower following the earnings release.
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