Xiaomi has published its financial report for the second quarter of 2026. Total revenue came in at $16.2 billion, down 7% year on year. The key structural shift in the report is the decline in the share of smartphones in total revenue, from roughly 82% to 77%: the company is deliberately diversifying its portfolio, shifting emphasis toward electric vehicles, services, and artificial-intelligence-based solutions.
Smartphones: Fewer Units, but Higher Prices
Xiaomi's smartphone shipments for the quarter fell by 26.3% — to 31.2 million units. At the same time, revenue from smartphone sales declined noticeably less — by only 7.5%. The gap between the drop in volumes and revenue points to a rise in average selling price (ASP): the company is selling fewer devices, but in a higher price segment. Against a backdrop in which sales fell for nearly all major market players, with the exception of leaders Samsung and Apple, Xiaomi held its place in the global top three.
IoT Falls, While EVs and AI Grow
Revenue from internet-of-things devices and the category the company calls Lifestyle declined more than average — by 19%. The services business showed only a slight decrease. Meanwhile, revenue from electric-vehicle sales and related solutions, as well as AI-based products, grew by 17%. It is precisely this segment that is becoming the main driver of future growth and the primary explanation for the structural shift in revenue.
Bet on R&D and the Automotive Segment
Xiaomi continues to pour enormous resources into research and development: $3.7 billion has already been spent this year, and the total forecast for R&D spending by year-end exceeds $5.9 billion. Nearly half of the company's workforce — 47.2% of employees — is engaged in R&D. A curious visual marker of the strategy: most of the photographs included in the financial report document itself are devoted to the automotive segment, underscoring the priority of the EV direction for management.
Contradictory Data
There is a discrepancy in the figures between the company's primary report and market estimates. Xiaomi itself reports a 26.3% drop in smartphone shipments alongside a 7.5% decline in smartphone revenue. At the same time, industry publications cite an estimate of a 19.2% sales collapse — a figure that, most likely, reflects the methodology of external market analysts (retail sales, different coverage and period), rather than the manufacturer's internal shipment data. The difference of more than 7 percentage points is explained precisely by the differing counting methodologies (shipments vs. retail sales, vendor sampling). Both versions should be regarded as correct within their respective approaches, rather than as mutually exclusive.
Context for the Russian Market
The "fewer devices, but more expensive" dynamic in the global report echoes the positioning of the new flagships: in Russia, sales of the Xiaomi 17 and 17 Ultra smartphones have launched, which form precisely the upper price segment and support the growth in average selling price. Thus, the company's strategy in key markets, including Russia, is consistent with the global trend toward premiumization of the lineup.
Bottom line: the second quarter of 2026 for Xiaomi is a quarter of managed decline in the mature smartphone and IoT businesses, alongside leading growth in electric vehicles and AI. The company is consciously changing its revenue structure and reallocating resources in favor of R&D, betting that the automotive and intelligent segments will, over time, offset the downturn in gadgets.
