Xiaomi reported strong Q2 revenue and profit growth, while smartphone shipments fell 26.3% year on year as the company continued expanding its premium and AI businesses.
Xiaomi reported revenue of CNY 108.9 billion ($16.2 billion) for the second quarter of 2026, alongside a gross profit margin of 19.8% and adjusted net profit of CNY 6.2 billion ($919 million).
The company’s smartphones and AIoT business remained its largest source of revenue, generating CNY 84 billion during the quarter with a gross profit margin of 20%. Meanwhile, Xiaomi’s Smart EV, AI and Other New Initiatives division contributed CNY 24.9 billion, although its electric vehicle business remained loss-making.
Xiaomi smartphone revenue reaches CNY 42.1 billion
Smartphones alone generated CNY 42.1 billion in revenue during Q2, while IoT and Lifestyle Products contributed CNY 31.3 billion.
Despite lower shipments, Xiaomi’s smartphone Average Selling Price (ASP) reached a record CNY 1,351, equivalent to around $200. The company also reported growing demand for premium devices, with premium smartphones accounting for 32.1% of its handset sales in mainland China.
The results indicate that Xiaomi is increasingly focusing on higher-value smartphones as competition in the global handset market intensifies.
Xiaomi smartphone shipments fall 26.3%
Xiaomi shipped 31.2 million smartphones globally during Q2 2026, giving it an 11.5% worldwide market share. However, shipments declined 26.3% compared with the same quarter last year.
Despite the decline, Xiaomi retained its position as the world’s third-largest smartphone maker for the 24th consecutive quarter.
Regionally, Xiaomi ranked second in Latin America, the Middle East and Southeast Asia, while securing third place in Europe and Africa. India was an exception, where the company ranked fourth.
Sales in mainland China also declined, falling to 8.4 million units in Q2 from 10.3 million in Q1 and 11.5 million in the same quarter last year.
Xiaomi increases AI and R&D investment
Xiaomi continues to invest heavily in research and development as it expands beyond smartphones. The company has spent CNY 18.2 billion on R&D so far this year and expects annual spending to exceed CNY 40 billion.
Around 47.2% of Xiaomi’s employees now work in R&D, with a significant portion involved in artificial intelligence development.
The company’s MiMo-V2.5 large language model generated 10.5 trillion tokens during the week beginning July 20, highlighting Xiaomi’s growing ambitions in AI.
AI will also play a major role in HyperOS 4, which is currently available in beta. Xiaomi says the new operating system will improve memory preloading and reduce dropped video frames by 28.9%.
Xiaomi expands beyond smartphones
Xiaomi shipped 2.8 million tablets during Q2, although shipments fell 6.8% year on year. The company ranked fourth globally and in mainland China in the tablet market.
Its wearable and true wireless stereo businesses remained comparatively strong, with Xiaomi ranking second globally and in mainland China in both categories.
The Q2 results highlight Xiaomi’s changing business mix, with premium smartphones, AI, IoT and new-energy vehicles becoming increasingly important to the company’s long-term growth strategy.