Adjusted net profit of 6.2 billion yuan ($919.50 million)for the period from April to June, fell short of an average analyst estimate of 6.6 billion yuan, according to LSEG data.
"Significant increases in key component costs, including memory, along with intensified industry competition, continued to create headwinds for our business," Xiaomi said in its earnings statement.
Second-quarter revenue came in at 108.9 billion yuan, it added, missing the average estimate of 112.2 billion.
Xiaomi's smartphone revenue fell 7.5% year-on-year to 42.1 billion yuan, while its smartphone gross margin declined to 8.5% from 11.5% a year earlier, clipped by higher prices for key components.
The world's No. 3 smartphone maker, Xiaomi shipped 31.2 million smartphone units in the quarter, down 26% from a year ago, for a second consecutive quarter of decline, research firm Omdia said.
With more than half its shipments priced below $200, Xiaomi was the most exposed among the top five smartphone vendors to memory cost inflation, Omdia has said.
Xiaomi is investing heavily in electric vehicles and artificial intelligence as it seeks new growth drivers beyond its increasingly saturated core business of smartphones.
The domestic car market has been in steady decline since late 2025, while other Chinese carmakers are aggressively expanding exports. Xiaomi plans to enter European markets in 2027.
Revenue stood at 23.9 billion yuan from its EV business in the second quarter, up 15.9% from a year earlier. The loss from operations related to its EV, AI and other new initiatives was 2.6 billion.
Xiaomi delivered 104,199 vehicles in the second quarter, up 28.2% from a year earlier.
In July, Xiaomi launched a new SUV series SkyNomad, expanding beyond battery-powered sedans and crossovers into a category popularised by models from Chinese peers.
($1=6.7428 Chinese yuan renminbi)
