China-based company Xiaomi has reported a 43% decline in net profit for the first quarter of 2026. According to Reuters, the electronics manufacturer’s total revenue fell by 11%. The primary cause of these disappointing financial results was cited by management as the high costs of purchasing memory chips, which heavily impacted the core business and profit margins of smartphone production.

According to research firm Omdia, Xiaomi shipped 33.8 million smartphones during the reporting period, marking a 19% decrease compared to the same period last year. This decline represents the sharpest drop among the five leading global mobile brands, and revenue from phone sales decreased by 12.5%. Analysts at Counterpoint Research anticipate unfavorable prospects for the market throughout 2026, as the memory chip shortage could extend until the end of 2027, compounded by geopolitical tension in the Middle East that dampens consumer sentiment.

In parallel, Xiaomi reported a downturn in its electric vehicle sector, delivering 80,856 vehicles over three months, 44.3% lower than fourth-quarter 2025 results, although this figure is still 6.6% higher than last year. The Russian market remains a vital segment for the brand. In 2025, 23.6 million smartphones were sold in Russia, generating revenue of 574 billion rubles, with Xiaomi joining Apple and Samsung in the top three most popular brands, at an average device price of 24,300 rubles.