Xiaomi Cuts Jobs Across Divisions as Earnings Come Under Pressure
Chinese smartphone and electronics giant Xiaomi Corp. has been implementing job cuts across multiple business units since March 2026, as the company faces mounting earnings pressure amid a challenging market environment, according to several company insiders. The layoffs affect teams in smartphones, automobiles, internet services, and international operations, covering roles in R&D, testing, product management, and marketing.
Context & Background
The restructuring comes as Xiaomi’s stock has fallen over 36% year-to-date, with market capitalization evaporating by more than 400 billion HKD (approximately $51.5 billion) in the first half of 2026. According to Caixin Global, Xiaomi’s Q1 2026 earnings showed revenue declining 10.9% year-on-year to RMB 99.14 billion, while net profit plunged 56.5% to RMB 4.73 billion.
Xiaomi had expanded aggressively in recent years, growing its workforce from approximately 35,000 employees at the end of 2023 to 56,531 by the end of 2025 — a 60% increase in just two years. The company’s rapid hiring was driven by its expansion into three major strategic initiatives: smartphone premiumization, the smart electric vehicle business, and AI foundation model development.
Key Developments
Management asked teams to submit layoff lists by April 23, 2026, with an initial target of approximately 30% staff reduction in some departments. Most affected employees left in June 2026, receiving N+1 compensation — the standard legal severance in China.
One Beijing employee reported that their department faced a 20% reduction in total personnel costs, calculated not by headcount but by overall cost. A Nanjing support team of approximately 40 people was reduced to about 10, while a 300-person Ultra Master sales team for Xiaomi Automotive was nearly dissolved, retaining only around 30 staff.
Xiaomi responded to inquiries by stating that the company has “normal business team adjustments, but there is no so-called large-scale layoffs.”
As Sina Finance reported, the financial pressures driving these cuts are multifaceted. Xiaomi’s smartphone business — its core revenue driver — saw Q1 revenue of RMB 44.3 billion, down 12.5% year-on-year, with shipments falling 19.2% to 33.8 million units. Rising component costs for memory, displays, and core chips squeezed smartphone margins from 12.4% to 10.1%.
The IoT and lifestyle products division fared even worse, with Q1 revenue of RMB 24.7 billion, down 23.7% year-on-year — its second consecutive quarter of negative growth, partly due to China’s scaled-back national consumer subsidy program.
Meanwhile, Xiaomi’s automotive business, while growing year-on-year, posted an operating loss of RMB 3.1 billion in Q1 alone, with each of the 80,900 vehicles delivered losing approximately RMB 38,000 ($5,250).
Analysis & Implications
According to analysis from DaChangCaiJingShe, this round of optimization follows a precise principle: not cutting by headcount, but reducing departmental personnel costs. The widely circulated 20% ratio is not a personnel elimination rate, but a hard annual cost reduction target.
What makes Xiaomi’s restructuring particularly notable is the simultaneous pursuit of two seemingly contradictory strategies. While cutting costs through layoffs and restricting access to expensive AI models like Anthropic’s Claude, the company is also making massive strategic investments. Xiaomi plans to invest no less than RMB 60 billion ($8.3 billion) in AI over the next three years, focusing on large language models (MiMo), embodied intelligence, and vehicle AI agents. The company has recruited top talent including Luo Fuli, a leading DeepSeek researcher, with a multi-million RMB annual salary.
On May 26, 2026, Xiaomi also announced a HK$20 billion ($2.6 billion) share buyback plan over 12 months — the largest in company history — signaling management’s effort to stabilize investor confidence.
Analysts note that Xiaomi’s valuation framework is shifting from a traditional Sum-of-the-Parts (SOTP) model to an “AI-driven platform company” framework. However, this transition’s success depends on the commercialization of the MiMo foundation model, volume growth of new SU7 vehicle variants, and the effectiveness of the Xuanjie (Xuanjie) chip Gen 2.
What’s Next
The layoffs have also damaged Xiaomi’s employer brand. A viral internal essay titled “Zhi Shen Mi Nei” (Inside Xiaomi), written by a 2024 campus recruit who was laid off shortly after being hired, highlighted the contradiction between Xiaomi’s “talent cradle” branding and its treatment of new hires. Xiaomi chose not to issue any public response, a calculated decision to avoid amplifying the controversy.
Looking ahead, key questions remain: Can Xiaomi’s RMB 60 billion AI investment generate meaningful revenue before its core businesses deteriorate further? Will the automotive business achieve its 2026 delivery target? And can the company maintain its competitive position across smartphones, EVs, IoT, and AI simultaneously — each requiring massive capital?
Xiaomi’s dual strategy of “cruel subtraction” and “life-or-death addition” represents a high-stakes bet that cost-cutting today will fund the innovations of tomorrow. Whether this gamble pays off will likely determine the company’s trajectory for the next decade.