Xiaomi reported a sharper-than-expected 43% drop in adjusted net income for the June quarter, marking its third consecutive quarterly profit decline as a global memory chip shortage continues to hammer the smartphone industry.
The Beijing-based company’s adjusted net income fell to 6.22 billion yuan ($922 million), while revenue declined 6.1%. Bloomberg reported the results on Monday, with Xiaomi executives acknowledging persistent component cost pressures but signaling they expect relief later in the year.
A Industry-Wide Crisis
Xiaomi is far from alone. China’s three largest Android smartphone manufacturers have collectively slashed their 2026 shipment targets by as much as 30%, according to Nikkei Asia reporting. Xiaomi itself lowered its 2026 forecast to approximately 135 million units, down sharply from the 170 million handsets it shipped in 2025. Oppo and Vivo have each cut their projections below 90 million units.
The root cause is AI. Hyperscale data centers are consuming vast quantities of high-bandwidth memory chips for GPU training clusters, leaving smartphone-grade DRAM and NAND in short supply. Reuters noted that Xiaomi sees cost pressures easing in the second half, but the damage to the current fiscal year is done.
| Metric | Q2 2026 | Change |
|---|---|---|
| Adjusted Net Income | 6.22B yuan ($922M) | -43% |
| Revenue | Fell 6.1% | -6.1% |
| 2026 Unit Forecast | ~135M units | vs 170M in 2025 |
Shift to EVs
Xiaomi is increasingly looking beyond phones for growth. The company’s electric vehicle division has become a bright spot, with its SU7 sedan gaining traction in China’s competitive EV market. Xiaomi has pledged to invest at least 60 billion yuan in AI over the next three years, CEO Lei Jun told investors, betting that software intelligence can differentiate its hardware ecosystem.
Gartner projects the memory crunch will reduce global smartphone shipments by 8.4% in 2026 and push average phone prices up 13% year-over-year. PC shipments are forecast to fall 10.4% with prices rising 17%. The squeeze is expected to ease in 2027 as new memory fabrication capacity comes online, but for now, the AI boom is imposing real costs on consumer electronics.
Sources: Bloomberg; Reuters; Nikkei Asia; Gartner; CNBC
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