Xiaomi Q2 Profit Doubles, Navigates Challenges with AI Investment

Xiaomi reported its second-quarter 2026 financial results, indicating a stabilisation after a period of competitive challenges. The technology organisation achieved revenue of approximately USD 15.02 billion. Adjusted net profit reached roughly USD 0.86 billion, with attributable net profit at about USD 1.30 billion, representing a quarterly doubling.

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Handset and AIoT products generated around USD 11.59 billion in revenue, with smartphones accounting for USD 5.81 billion. Xiaomi's automotive division delivered over 100,000 vehicles, marking an increase of almost 30 per cent year over year, contributing approximately USD 3.30 billion. This segment, including artificial intelligence and other innovative ventures, reached around USD 3.43 billion. According to Omdia data, Xiaomi's product shipments ranked among the top three in 53 nations. According to the Pandaily report, the organisation's AIoT ecosystem presently comprises 1.16 billion connected devices, a 17.4 per cent increase, serving 24.6 million users who own five or more devices. This quarter's performance suggests the company has navigated a difficult period, with its handset and automotive operations showing stability compared to the previous quarter.

Investment in new technologies is a central focus for the company. Xiaomi's research and development spending for the second quarter reached approximately USD 1.27 billion, an increase of 18.9 per cent. So, the organisation plans to allocate at least USD 27.59 billion to R&D over the next five years, with a primary focus on artificial intelligence and chip development. Chief Executive Lei Jun identified AI as the principal opportunity for the coming decade, with 2026 AI R&D and capital expenditure projected to exceed USD 2.21 billion, and a three-year total of over USD 8.28 billion.

Initial results from this investment are evident. During the second quarter, Xiaomi launched the MiMo-V2.5 model, which subsequently surpassed DeepSeek-V4 Flash on both OpenRouter's monthly and weekly call charts. Chief Financial Officer Lin Shiwei attributed this outcome to advantages in model capability, inference efficiency, and cost management. A new iteration of the MiMo model is currently undergoing training for a forthcoming release. The HyperOS 4 operating system facilitates MiMo's integration across mobile phones, IoT devices, and vehicles, with Super Xiaoai 2.0 enabling cross application and cross device task coordination. MiMo is also scheduled to introduce its first desktop application, entering a market that includes products from Doubao, Kimi, and QwenWork. The autos and AI segment generated additional business income of approximately USD 0.14 billion, an increase of 56.5 per cent.

The development of proprietary chips constitutes another significant area of attention. Mr Jun announced a USD 6.90 billion, ten-year initiative to engineer Xuanjie chips. And President Lu Weibing confirmed that the O1 chip has been deployed in over one million units across three different product terminals, with a new-generation chip expected to follow. In the field of robotics, Xiaomi introduced two embodied foundation models that achieved top rankings on both WorldArena and RoboCasa. A new humanoid robot developed by the company has commenced factory operations, demonstrating a 98 per cent success rate on a self-tapping nut workstation.

These new assets require ongoing capital outlay. At the same time, the existing handset and AIoT divisions seek further advancements. Global smartphone shipments declined by approximately six per cent, according to Omdia, due to increased chip prices and subdued demand. Xiaomi's strategy for its phone business involves premiumisation and global expansion. The average selling price for its smartphones increased to approximately USD 186, a 25.9 per cent rise and a record high for the organisation. Domestic models priced at USD 414 or above represented 32.1 per cent of sales, also a record, with overseas premium market share reaching a new peak. The company anticipates an inflection point for its performance in the latter half of the year.

• Xiaomi reported Q2 2026 revenue of approximately USD 15.02 billion, with attributable net profit doubling quarter over quarter to about USD 1.30 billion.

• The company's automotive division delivered over 100,000 vehicles, a nearly 30 per cent increase year over year, while its AIoT ecosystem grew to 1.16 billion connected devices.

• Significant R&D investment targets artificial intelligence and proprietary chip development, including the MiMo-V2.5 model and Xuanjie chips.

• Xiaomi's new humanoid robot has commenced factory work, achieving a 98 per cent success rate on specific tasks.

• The smartphone strategy focuses on premiumisation and global expansion, with average selling prices and premium segment sales reaching record levels.

Source: Pandaily