Xiaomi Q1 Revenue Holds at ¥99.1bn as Auto Sales and Overseas IoT Offset Memory Costs

How Xiaomi Kept Q1 Revenue Near ¥99bn Despite Rising Memory Costs

Hong Kong-listed Xiaomi Group (HK01810) reported first-quarter 2026 revenue of ¥99.1 billion, keeping its top line near the ¥100 billion mark while absorbing higher memory-component costs. Group gross margin came in at 22%, and operating profit in the core smartphone-plus-AIoT business nearly tripled quarter on quarter. Research and development spending rose 33.4% year on year to ¥9 billion.

The quarter's standout growth came from electric vehicles and overseas IoT devices. Xiaomi delivered more than 80,000 vehicles and generated close to ¥20 billion in auto revenue during a period in which China's new-energy vehicle market contracted by about 20%, according to the company. Yiche terminal sales data for January-April placed the SU7 first in the 200,000-yuan-plus pure-electric sedan segment and the YU7 second in the SUV segment. Overseas IoT revenue approached ¥10 billion, a record.

Segment results were broadly stable: smartphone revenue was ¥44.3 billion; IoT and lifestyle products contributed ¥24.7 billion with a 25.2% gross margin; internet services added ¥9.5 billion, up 4.3% year on year, at a 76.1% margin. Global monthly active users reached 746 million, and the AIoT platform passed 1.1 billion connected devices.

Xiaomi is stepping up its AI bet, planning at least ¥16 billion of AI investment this year and more than ¥60 billion over three years. It launched the MiMo-V2.5 open-source model family in April, expanded an AI agent across phones, tablets, PCs and smart speakers, and moved a humanoid robot into its car plant for real-world training. Management also warned that memory prices are unlikely to fall quickly, signaling continued cost pressure across the industry.

Reading Xiaomi's Q1: Auto, Overseas IoT and the AI Bet

Memory Costs Are Now a Structural Theme, Not a Blip

President Lu Weibing's comments go beyond Xiaomi's own guidance: he said the whole supply chain should adapt to rising costs and should not expect memory prices to fall in the short term. That is a direct signal that smartphone makers' margins will be contested through 2026. Xiaomi kept group gross margin at 22% and lifted core operating profit, but the fact it flags storage prices as external pressure suggests the margin defence depends on product mix and scale rather than lower input costs.

Auto Is Becoming a Second Pillar at Scale

Auto revenue of close to ¥20 billion is roughly one fifth of group revenue in the quarter, and it came while the domestic NEV market fell about 20%. The SU7 and YU7 rankings in high-end segments explain the strategy: Xiaomi is targeting the premium EV niche where price competition is less brutal than in volume segments. The new European R&D centre points to the next phase of that plan, bringing engineering closer to overseas markets where premium Chinese brands have historically found healthier margins.

Overseas IoT Is the Quiet Mix Upgrade

Record overseas IoT revenue near ¥10 billion, driven by tablets, TVs and large appliances, deepens the company's human-car-home ecosystem. Combined with internet services at a 76.1% gross margin, this improves the quality of earnings even when the handset line faces cost pressure.

The AI Spend Is Large but Monetisation Is Still Ahead

Planned AI spending of ¥16 billion this year and ¥60 billion over three years is a meaningful commitment for a company whose internet services revenue is only ¥9.5 billion per quarter. The MiMo-V2.5-Pro model's top ranking among open-source models, the AI agent rollout and robotic deployments are technology milestones, but the earnings statement does not yet show AI revenue. Investors should treat AI as a long-term competitive investment, not a near-term profit driver.

What Xiaomi's Q1 Results Signal to Investors, Suppliers and Rivals

For investors, suppliers and competitors, the quarter offers several concrete signals.

• Investors should watch whether core phone×AIoT operating profit sustains its sharp sequential gain and whether group gross margin holds at 22% as memory costs persist.
• Auto is now a roughly ¥20 billion-per-quarter revenue line; Xiaomi's delivery trajectory and the SU7/YU7 high-end rankings are the key indicators of whether this pillar can offset handset input-cost pressure.
• Suppliers in the memory and storage chain should take Lu Weibing's guidance at face value: Xiaomi expects elevated component prices to persist, reinforcing pricing power for memory makers in 2026.
• For rivals in China's smartphone and EV markets, Xiaomi's 16.0% domestic handset share and top-two high-end EV model positions mean pricing and product-launch responses are likely in the coming quarters.
• Track AI monetisation separately from AI spending: ¥16 billion planned for 2026 and ¥60 billion over three years are commitments that need measurable payback beyond the MiMo model's benchmark results.