Xiaomi's Q2 profit slides 42.6% on component cost pressure

Beijing, Aug 18 - Chinese tech giant Xiaomi reported a 42.6% drop in second-quarter adjusted net profit to 6.2 billion yuan, falling short of analysts' predictions. The decline was attributed to high component costs, particularly memory, which pressured margins in its smartphone and tablet divisions. Xiaomi's smartphone revenue declined 7.5% year-on-year to 42.1 billion yuan, with a gross margin of 8.5% from 11.5% the previous year.

Despite the decline in smartphone sales, the company's electric vehicle business showed growth, with revenue increasing 15.9% to 23.9 billion yuan. The company's overall revenue dropped 6.1% to 108.9 billion yuan, missing the consensus forecast of 112.2 billion yuan. Despite the setback, Xiaomi's President William Lu stated that the most challenging period for the smartphone business had passed and that memory cost increases were starting to slow in the second half.