Xiaomi Q2 2026 Revenue Falls 6.1% Amid High R&D and Capital Expenditure

Zhixidongxi reported on August 18 that today, Xiaomi released its second quarter (Q2) 2026 financial results, showing a slight recovery in revenue and net profit. Lei Jun posted on Weibo to share the performance data with netizens. Lu Weibing, partner and president of Xiaomi Group, revealed on the earnings call that the Xuanjie O1 chip, launched by Xiaomi last year, has achieved cumulative shipments of over one million units across three terminal products, and a new generation of Xiaomi Xuanjie chips is about to be released.

Lei Jun posts a Weibo update on performance (source: Weibo)

The financial report shows that Xiaomi's revenue in the second quarter was approximately RMB 108.9 billion, a 6.1% year-over-year decline; adjusted net profit was approximately RMB 6.2 billion, a 42.6% year-over-year decline.

Xiaomi Group revenue and net profit (data range: Q2 2025 - Q2 2026, chart by Zhixidong)

In the second quarter, Xiaomi's capital expenditures amounted to approximately RMB 3.6 billion, with RMB 2.4 billion allocated to innovative businesses such as intelligent electric vehicles and AI, accounting for about 67% of total capital spending; research and development expenditures reached approximately RMB 9.2 billion, representing nearly a 19% year-over-year increase, with cumulative R&D investment for the first half of the year totaling RMB 18.2 billion.

The financial report shows that in the second quarter, Xiaomi's "Smartphone × AIoT" business revenue reached RMB 84 billion, with a stable gross margin of 20%.

Lu Weibing disclosed on the earnings call that the memory price increase exceeded Xiaomi's expectations. From a sales perspective, the upward trend in memory prices has had the most noticeable impact on entry-level and budget models. Lu Weibing predicts that the memory price rise is expected to slow down midway through the third quarter and maintain a gradual upward trend in the fourth quarter, with the overall situation gradually becoming more manageable.

In terms of innovative businesses, the overall revenue from segments such as intelligent electric vehicles and AI increased by 17.1% year-over-year to RMB 24.9 billion. Intelligent electric vehicles contributed RMB 23.9 billion in revenue, while emerging businesses like AI generated approximately RMB 1 billion in revenue, including income from the commercialization of the Xiaomi MiMo large model.

However, the innovative business segment is still in a strategic investment phase. This quarter, the segment recorded an operating loss of RMB 2.6 billion.

Regarding this loss, Xiaomi Group's CFO, Lin Shiwei, explained that Xiaomi's AI is currently in a phase of large-scale investment and will continue to drive the transformation of its business through AI. The Token Plan previously launched has generated some revenue, but monetization is not the primary goal.

Xiaomi business segment revenue breakdown (infographic by Zhixidong)

Before mining DeepSeek After Luo Fuli, the researcher dubbed a "genius girl" by the industry, every move by Xiaomi AI has been thrust into the spotlight.

On June 9, the Xiaomi MiMo team and the inference system team TileRT jointly announced that the UltraSpeed mode of the flagship large model Xiaomi MiMo-V2.5-Pro, released in April, has achieved for the first time an output speed exceeding 1,000 tokens/s for a trillion-parameter (1T) flagship model.

In the same month, Xiaomi's MiMo team released and open-sourced the AI coding assistant MiMoCode V0.1.0, which is developed based on the open-source project OpenCode. Its core capability addresses the common issues of traditional Coding Agents—such as forgetfulness, deviation, and excessive rework—through “model-agent collaboration + engineered memory.”

The official version of Xiaomi MiMo Claw will be launched in June, positioned as a cloud-hosted, locally deployment-free, out-of-the-box personal Agent, powered by the MiMo-V2.5-Pro large model and integrated with the Kingsoft Office ecosystem.

On June 18, Xiaomi also released and open-sourced Xiaomi Miloco 2.0, the industry's first whole-home intelligent AI open solution capable of delivering AI-driven proactive services with home memory.

Xiaomi Miloco 2.0 GitHub homepage (source: GitHub)

In August, Xiaomi officially launched the Xiaomi HyperOS 4 Beta, introducing load calculation and memory preloading technologies for its proprietary Xiaomi HyperCore kernel, and establishing the Xiaomi HyperOS application runtime environment.

In addition, Xiaomi has launched "Super Xiaoai 2.0," which features enhanced task orchestration and content generation capabilities through improvements in its AI architecture and integration with the Xiaomi MiMo large model, with specific optimizations for cross-app and cross-device scenarios.

In embodied intelligence, on July 15, Xiaomi launched the Xiaomi-Robotics-U0, a 38B-parameter autoregressive world foundation model and the first unified embodied generative model to integrate an image generation base model with embodied world modeling.

Robot interaction video generation with multi-view prediction (Source: Xiaomi Technology)

On July 14, Xiaomi also revealed the latest progress on its robot. Earlier this year, the Xiaomi robot performed tasks at the self-tapping nut placement station in Xiaomi’s automotive factory, with its success rate on both sides of the station increasing to 98%. Meanwhile, the robot also achieved a 90% success rate in sorting the center console side panels and folding and recycling material bins.

When asked about the positioning of robotics within Xiaomi, Lu Weibing replied that humanoid robots still have a long way to go before large-scale commercialization. Xiaomi must first successfully execute its existing businesses, such as implementing smart factories and smart homes. In the future, many of Xiaomi’s core capabilities will synergize with robotics, and advancements in robotic technology will also feed back into and enhance existing businesses.

The financial report showed that in the second quarter, Xiaomi's smartphone revenue was RMB 42.1 billion, a 7.5% year-over-year decrease, primarily due to lower smartphone shipment volumes, partially offset by an increase in the average selling price (ASP) of smartphones.

According to Omdia data, in the second quarter of 2026, global smartphone shipments declined by 6% year-over-year due to storage prices. During the same period, Xiaomi's global smartphone shipments reached 31.2 million units, with smartphone business revenue of RMB 42.1 billion and a gross margin of 8.5%.

Facing rising storage costs, Xiaomi's smartphone division has adopted a premiumization strategy, raising product prices while continuing to optimize its product mix. In the second quarter of 2026, Xiaomi's average selling price (ASP) for smartphones increased by 25.9% year-over-year to RMB 1,351.

According to third-party data, in the second quarter of 2026, Xiaomi's smartphones priced at RMB 3,000 and above accounted for 32.1% of total smartphone sales in mainland China, reaching a record high and increasing by 4.5% year-over-year. Among these, Xiaomi's market share in the RMB 3,000–4,000 price segment reached 16.2%, up 3.3% year-over-year.

According to Omdia data, in the second quarter of 2026, Xiaomi ranked third globally in smartphone shipments, achieving 24 consecutive quarters in the top three worldwide.

Global smartphone shipments and market share (Source: Omdia)

Meanwhile, Xiaomi ranks among the top three in smartphone shipments in 53 countries and regions worldwide, and among the top five in 67 countries and regions worldwide.

Among these, Xiaomi's smartphone shipments ranked second in Southeast Asia, Latin America, and the Middle East, with market shares of 19.3%, 16.2%, and 13.5% respectively; and third in Europe and Africa, with market shares of 16.5% and 10.9% respectively.

Other products: According to Omdia data, in the second quarter of 2026, Xiaomi’s tablet shipments ranked fourth globally and fourth in mainland China; TWS earbuds ranked second globally and second in mainland China; wearable wristband devices ranked second globally and second in mainland China.

Regarding the Xiaomi ecosystem, the financial report shows that as of June 30, 2026, the number of IoT devices connected to the Xiaomi AIoT platform (excluding smartphones and tablets) reached 1.16 billion, a year-over-year increase of 17.4%; the number of users with five or more devices connected to the Xiaomi AIoT platform (excluding smartphones and tablets) reached 24.6 million, a year-over-year increase of 20.2%.

In June 2026, the monthly active users of the Mi Home app increased by 9.7% year-over-year to 124 million, while the monthly active users of Xiao Ai Tongxue increased by 14.2% year-over-year to 175 million.

In the second quarter of 2026, the overall revenue from Xiaomi's smart electric vehicles, AI, and other segments increased by 17.1% year-over-year to RMB 24.9 billion, with smart electric vehicles contributing RMB 23.9 billion.

The financial report showed that in the second quarter, Xiaomi delivered a total of 104,199 new vehicles, a 28.2% year-over-year increase. In the first half of 2026, the Xiaomi SU7 series ranked first in sales among pure electric sedans priced above RMB 200,000 in mainland China. As of August 17, 2026, the cumulative deliveries of the Xiaomi SU7 series exceeded 500,000 units.

Based on this Q2 financial report, Xiaomi is in a period where its new businesses are still growing, while its traditional businesses continue to face pressure.

On one hand, Xiaomi's core smartphone business has maintained its market share amid industry downturns, with its premiumization strategy proving effective—ASP and the proportion of premium devices have both seen tangible growth. On the other hand, its new businesses in automotive and AI continue to burn significant cash, with a loss of 2.6 billion and capital expenditures of 2.4 billion, making a profit turnaround unlikely in the near term.

In terms of AI advancements, products such as agents, operating systems, and embodied intelligence models have been released densely within the past six months, showing Xiaomi’s intense effort to catch up in AI.

Whether these technologies can ultimately be transformed into product competitiveness and truly connect Xiaomi’s cars and IoT devices into a single network is just beginning to be tested by the market.

This article is from the WeChat public account "Zhi Dongxi" (ID: zhidxcom), author: Wang Han, editor: Bing Qian