Xiaomi Group has hit a speed bump after five quarters of impressive growth. The Chinese tech company reported Q1 2026 revenue of 99.1 billion yuan, marking the first time in six quarters that quarterly revenue fell below the 100 billion yuan threshold.
The results represent a 10.9% year-over-year decline from 111.3 billion yuan in Q1 2025 and a 15.2% drop from the previous quarter’s 116.9 billion yuan. Net profit also took a hit, falling 56.5% year-over-year to 4.7 billion yuan. The smartphone maker is grappling with rising memory prices and market pressures that are squeezing margins across its core businesses.
In response to the challenging quarter, Xiaomi announced a massive HK$20 billion share repurchase program starting June 2nd. The buyback plan runs for one year and represents the second-highest repurchase intensity in Hong Kong’s stock market, trailing only Tencent. The move signals management’s confidence in the company’s long-term prospects despite near-term headwinds.
This buyback comes as Xiaomi’s stock price has been under severe pressure. Shares closed at HK$29.76, giving the company a market value of HK$769 billion – a dramatic fall from over HK$60 per share just one year ago. The decline since September 2025 has trapped many investors who bought near the peak.
The memory price surge is hitting Xiaomi’s smartphone business particularly hard. Smartphone revenue dropped 12.5% year-over-year to 44.3 billion yuan in Q1, with shipments falling 19.2% to 33.8 million units. However, the average selling price increased 8.2% to 1,310.1 yuan per unit as Xiaomi focused on higher-end devices.
CEO Lei Jun warned that mobile phone prices across the industry will continue rising due to memory cost pressures. “If you want to change your phone in the next year, the earlier the better,” Lei Jun said, noting that TV memory prices have increased 10-fold and the price increases are “very crazy.”
Xiaomi is trying to absorb these cost increases internally rather than immediately passing them to consumers, but executives acknowledged the company’s ability to do so is limited. The strategy involves repositioning products and upgrading the product matrix to balance scale with profitability.
The company’s IoT and consumer products division also struggled, with revenue falling 23.7% to 24.7 billion yuan. This decline was mainly due to the withdrawal of government subsidies in mainland China, though overseas markets showed growth driven by smart TVs and tablets.
One bright spot was Xiaomi’s electric vehicle business, which posted 19 billion yuan in revenue – a 5.1% year-over-year increase. Vehicle deliveries grew 6.6% to 80,856 units, helped by the launch of the YU7 series. However, the average selling price decreased slightly to 235,116 yuan due to purchase tax subsidies and lower-priced inventory sales.
President Lu Weibing revealed that the new YU7 will begin formal deliveries this week, with more than half of customers choosing the fully-equipped YU7 GT priced at 429,900 yuan. Production is ramping up gradually, with initial monthly output of about 2,400 units for the flagship GT model.
Looking ahead, Xiaomi is betting heavily on AI to transform its business. Lu Weibing outlined the company’s strategy to “reconstruct the entire ecosystem of vehicles, homes, and people with AI” over the next five years. This includes:
- Developing its MiMo large language models, with MiMo-V2.5-Pro showing strong results among open-source models
- Applying AI to robotics and autonomous driving through VLA models and XLA cognitive architecture
- Integrating AI across devices through tools like miclaw and enhanced Super Xiaoai assistant
The company plans to release a new-generation operating system in July or August that will bring a “different interactive experience” powered by AI. Lu Weibing called AI “the biggest incremental opportunity in the mobile phone industry” and said the entire industry is facing a revolution.
Despite the challenging quarter, Xiaomi maintained its position as a top-three global smartphone vendor for the 23rd consecutive quarter. The company achieved record-high average selling prices both globally and overseas, while smartphone gross profit margins exceeded market expectations.
Xiaomi’s aggressive share buyback program reflects management’s belief that current market conditions don’t reflect the company’s long-term value. Since going public nearly eight years ago, Xiaomi has repurchased over HK$8.4 billion worth of shares in 2026 alone – more than the entire previous year. CEO Lei Jun also personally invested HK$100 million in share buybacks in November 2025 to support the stock price during a particularly volatile period.