Xiaomi job cuts: key takeaways
- Xiaomi has reportedly cut jobs across its smartphone, EV, internet-services and international teams as it attempts to contain costs
- Rising chip prices, softer consumer demand and intense competition are putting pressure on its core smartphone business and overall profitability
- The move highlights the trade-off facing Xiaomi: funding expensive long-term bets in EVs and AI while protecting margins today
Xiaomi is cutting back on jobs. Company insiders shared info with Caixin on the topic, saying that the cuts are taking place across a range of different departments. Phones, EVs, internet services and international operations are all shedding staff. Management was asked in late April to submit layoff lists, and initial targets were set at 30%.
That doesn’t mean 30% is going to go though, and nor is it a sign that the company is in decline. More like they’re feeling a pinch. 2026 showed a difficult first quarter for the company.
Smartphone shipments have fallen 19%, but this is not the end of Xiaomi
Revenue fell 11% year on year to RMB 99.14 billion (US $14.6 billion), while adjusted net profit declined 43% to RMB 6.1 billion (US $899 million). Its core smartphone business has been especially hard hit: shipments fell 19% to 33.8 million units, smartphone revenue dropped 12.5%, and gross margin narrowed from 12.4% to 10.1%.
It’s not easy out there for Chinese consumer electronics companies at the moment. Memory-chip and component costs are rising, and in turn making phones more expensive to produce. Weak demand and fierce domestic competition haven’t helped either. That limits how much of those rising costs manufacturers can pass on to consumers.
The company is investing heavily in its EV and AI
What’s interesting is that Xiaomi pretty much has to weather this storm head on. The company is still investing heavily in its EV and AI businesses – two areas it sees as essential. Its EV, AI and other new-initiatives segment generated RMB 19.9 billion (US $2.9 billion) in revenue in Q1, although it remained loss-making. The company has also committed at least RMB 60 billion (US $8.8 billion) to AI investment over three years. The bet is that these investments will give the company legs for the future.
The Dao view: Job cuts should not be read as the decline of Xiaomi
This isn’t simply a story of Xiaomi struggling. It is a story of a company shifting from rapid expansion to cost discipline. For years, Xiaomi could hire aggressively while using its smartphones, appliances and internet services to fund ambitious new bets. But those established electronics businesses are now under pressure from pricier components, subdued demand and intense competition.
At the same time, Xiaomi is spending heavily to become a credible force in electric vehicles and AI. Both are strategically necessary. Neither comes cheaply. The layoffs show that the company’s next phase will depend a lot on finding a way to finance them without allowing its core business to erode.
