Xiaomi profit plummets in Q1 as memory prices soar

Xiaomi had a difficult start to the year, reporting another drop in profits as memory shortages, stiff competition and weak demand affected its business.

The sluggish performance highlights the multiple challenges Xiaomi faces as it continues the transition to electric vehicles and smart devices: As the artificial intelligence boom eats into memory supply, higher costs are cutting into smartphone profit margins. At the same time, the automotive segment is facing a widespread slowdown in China, and the home appliance business is experiencing a period of weaker demand as government subsidies decline.

The Beijing-based company's net profit fell 57 percent to 4.72 billion yuan in the first quarter, or $694.7 million. Revenue fell 11% to 99.14 billion yuan, the company said on Tuesday (26).

That was below analysts' expectations of a net profit of 5.64 billion yuan on revenue of 99.52 billion yuan, according to research by Visible Alpha.

Smartphone business revenue fell 12.5% during the three-month period, a result Xiaomi attributed to lower shipments despite higher average selling prices.

The Internet of Things and lifestyle products segment - which includes household appliances - was the worst performing. Segment sales fell 24% to 24.7 billion yuan despite higher revenue in overseas markets.

The company's electric vehicle business - the company's newest and fastest-growing division - performed better, with revenue rising 5.1%, driven by increased car deliveries.

To demonstrate the company's confidence in its business prospects, Xiaomi announced this Tuesday (26) that it plans a share buyback in the market worth up to 20 billion Hong Kong dollars, equivalent to US$2.55 billion, over the next 12 months.

*Source: Dow Jones Newswires

**Content translated with the help of Artificial Intelligence, reviewed and edited by the Broadcast editorial team, Grupo Estado's real-time news system

Source: CNN