Xiaomi reported a 42.6% year-on-year decline in net profit for the second quarter, with the Chinese technology group citing surging costs for memory chips and other components as the primary drag on results. Net income fell to €794.2 million from €1.38 billion in the same period last year, while revenue totaled €13.95 billion, missing market expectations.
The company attributed the weaker performance to a 26% drop in smartphone shipments to 31.2 million units, as it passed on higher component costs to consumers. Memory chip prices have risen sharply over the past 12 months, pressuring margins, which contracted by about a quarter to 8.5%. Despite the downturn in its core business, Xiaomi’s fledgling electric vehicle division posted a 15.8% increase in activity, though the segment, alongside the artificial intelligence business, remained loss-making at €333 million.
Xiaomi reiterated plans to expand its electric vehicle operations into Europe next year, a move analysts suggest could help offset softening demand in its traditional smartphone market. The company did not provide updated guidance for the full fiscal year, though the second-quarter results underscore the challenges posed by rising input costs and intensifying competition in the global handset market.
