Xiaomi Corp’s quarterly profit fell for the first time in three years at the end of last year as the Chinese smartphone and electric vehicle giant navigated rising costs and intensifying competition.
Price hikes may be inevitable if the company cannot withstand the pressure from rising memory costs any longer, Xiaomi president Lu Weibing told a post-earnings call, without elaborating.
The memory cost increase was higher than initially thought, he added. “Some companies may have extreme difficulties in operating in such a long cycle of rising costs, face big losses or even go bust,” he said.
Adjusted net profit for the quarter to December 31 fell to 6.3 billion yuan ($914.5 million), the first quarterly drop since 2022’s fourth quarter, a stock filing on Tuesday showed, beating an average analyst estimate of 5.7 billion yuan, according to LSEG data.
Xiaomi, which also makes home appliances, said fourth-quarter revenue came in at 116.9 billion yuan, slightly above the average estimate of 116.2 billion yuan, despite much higher memory costs and rising competition.
For the whole year, profit was up 43.8% at 39.2 billion yuan on the back of a 25% rise in revenue.
EV delivery target
Xiaomi launched the SU7 electric sedan two years ago, entering China’s crowded automotive sector after more than a decade focused on consumer electronics.
It launched an upgraded SU7 model last week, hoping to sustain the vehicle’s robust sales momentum. Xiaomi beat its EV delivery target of 350,000 EVs last year, propelled by strong sales of SU7s that hit more than 258,000 units.
The company reported 106.1 billion yuan in revenue for its EV, AI and other new initiatives in 2025, and the segment posted its first annual operating profit of 900 million yuan, the company said.
Xiaomi CEO Lei Jun said the company will invest at least 60 billion yuan in artificial intelligence over the next three years.
In the fourth quarter, Xiaomi delivered 145,115 EVs, up 33.4% from the third quarter.
Xiaomi‘s global smartphone shipments totalled 165.2 million units last year, missing its target of 180 million units.
Xiaomi and other Chinese smartphone makers are facing headwinds as Android brands raise prices on some models to offset surging prices of memory chips, triggered by growing demand from AI data centre operators.
China’s overall smartphone market fell 4% year-on-year in the January to early March period, with government subsidies doing little to revive sluggish consumer demand.
The broader memory cost crunch is forecast to persist throughout 2026, forcing handset makers into difficult trade-offs between managing costs, protecting margins and hitting shipment targets.
Reuters
