China's Xiaomi Corp posted a 43% slump in first-quarter net profit on Tuesday, as its smartphone business was pressured by high memory chip costs.
The Chinese smartphone and electric-vehicle maker reported 6.1 billion yuan ($899 million) adjusted net profit for the January-March period.
That compared with the average analyst estimate of 6.4 billion yuan, according to LSEG data.
Xiaomi is investing heavily in electric vehicles and artificial intelligence, seeking new revenue drivers beyond its core handset business.
Its EV business is growing but still dragging on earnings because of heavy investment and lower margins.
The company reported 19 billion yuan in revenue for its EV business for the first quarter, up 5.1% from a year ago.
The loss from operations related to its EV, AI and other new initiatives reached 3.1 billion yuan.
In the first quarter, Xiaomi delivered 80,856 EVs, down 44.3% from 145,115 EVs in the fourth quarter. Deliveries were up 6.6% from a year earlier.
Xiaomi said first-quarter revenue was 99.1 billion yuan. That was slightly below the average analyst estimate of 103.4 billion yuan.
Shares of Hong Kong-listed Xiaomi closed down 0.8% at HK$29.76.
Last week, the company released a new, cheaper standard version of its flagship YU7 SUV series, starting at 233,500 yuan, about 8% lower than the previous version, stepping up pressure on Tesla in China's competitive but slowing car market. Chinese automakers are now targeting expansion abroad, focusing on markets such as Europe, Latin America, the Middle East and Southeast Asia, where demand for lower-cost EVs has grown. Xiaomi plans to enter European markets starting in 2027.
The world's No.3 smartphone maker shipped 33.8 million smartphone units in the first quarter, down 19% from a year ago, marking the steepest decline among the top five global brands, according to research firm Omdia.
Xiaomi's smartphone revenue fell 12.5% year-on-year to 44.3 billion yuan, while its smartphone gross margin dropped to 10.1% from 12.4% a year earlier, mainly due to higher key component prices and increased competition in mainland China.
The smartphone market outlook for 2026 remains weak, as the memory chip crunch may last until late 2027 and the Middle East tensions also weigh on consumer sentiment, another research firm, Counterpoint Research, has said.
($1 = 6.7855 Chinese yuan renminbi)
