Xiaomi and Meituan Announce Major Job Cuts

Two of China’s largest technology companies — Xiaomi Corp. and Meituan — have announced significant workforce reductions, signaling deepening consolidation in the country’s tech sector amid rising costs, intense price competition, and a broader push toward AI automation. Xiaomi has been cutting jobs across multiple divisions since March, while Meituan confirmed laying off fewer than 2,000 employees over the past two months, according to reports by Caixin Global.

The Scale of the Cuts

Xiaomi’s layoffs have affected teams in smartphones, automobiles, internet services, and international operations, covering roles in research and development, testing, product management, and marketing, company insiders told Caixin. Management asked teams to submit layoff lists with an initial target of cutting about 30% of staff in some teams. One employee reported that their department’s layoff target was 20% of total labor costs, not headcount. Xiaomi acknowledged “normal business team adjustments” but denied “large-scale layoffs.”

Meituan, the food-delivery giant, confirmed it has laid off fewer than 2,000 employees out of its roughly 110,000-strong workforce. However, employees described the reductions, which began in early May, as the company’s largest personnel adjustment in recent years, with some groups seeing headcount cuts of 20% to 40%. The layoffs affected domestic businesses including in-store group buying, commercialization, and Meituan Instashopping, according to Caixin’s reporting.

Financial Pressures Driving the Cuts

Xiaomi’s job cuts come as the company faces its steepest financial downturn in years. In Q1 2026, net profit fell 57% year-on-year to 4.72 billion yuan (~$695 million), worse than analyst estimates of a 52% decline. Revenue dropped 11% to 99.14 billion yuan — the first quarterly decline in nearly three years. Smartphone revenue fell 12.5% to 44.3 billion yuan, with shipments declining 19% to 33.8 million units, as reported by The Tech Portal.

A key driver of Xiaomi’s distress is the surge in memory chip prices. DRAM prices have risen 369% from 2025 lows, driven by AI infrastructure demand that has squeezed supply for traditional memory used in smartphones. Samsung and SK Hynix, which control over 70% of the global DRAM market, planned further price increases in Q2 2026.

Xiaomi’s electric vehicle business, while generating 19.86 billion yuan in revenue (up 6.9% YoY), recorded operating losses of approximately 3.1 billion yuan. The company delivered 80,856 EVs in Q1 2026, down 44% from the previous quarter as China’s EV market became increasingly competitive.

Meituan’s financial struggles stem from a costly price war in food delivery and instant retail. The company reported a full-year 2025 net loss of 23.4 billion yuan (~$3.4 billion), reversing a 35.8 billion yuan profit in 2024. The losses were driven by intense competition, particularly with Alibaba’s Taobao Flash, which announced a 50-billion-yuan subsidy plan in July 2025. Meituan’s Core Local Commerce segment recorded an operating loss of 6.9 billion yuan in 2025.

The AI Factor

Both companies are simultaneously cutting headcount and investing heavily in AI capabilities — a pattern increasingly common across China’s tech sector. In May 2026, Xiaomi restricted access to costly large language models like Anthropic’s Claude and capped token usage, while developing its own MiMo-V2-Pro model, a trillion-parameter LLM released in April 2026. Meituan’s Core Local Commerce division established an AI Transformation department, signaling a strategic shift toward automation.

This dual trend — cutting jobs while investing in AI — reflects a broader transformation across China’s technology industry. According to the OECD AI Incidents Monitor, China’s major tech companies — including Alibaba, Tencent, ByteDance, Meituan, and Baidu — have collectively cut around 130,000 jobs over 18 months, primarily driven by rapid AI adoption and automation. As Rest of World reported, Alibaba reduced its head count by 34% in 2025 as it pivoted toward AI and cloud infrastructure, while Baidu ended 2025 with nearly 7% fewer employees.

Broader Implications

The layoffs at Xiaomi and Meituan are not isolated events but part of a structural shift in China’s tech sector. After years of breakneck expansion and hiring sprees, the industry is entering a consolidation phase where cost control and profitability take precedence over growth.

A growing trend in 2026 involves “stealth layoffs” — deliberate workforce reductions carried out without formal announcements, where managers systematically degrade workers’ roles until they resign, avoiding formal layoff procedures and severance costs. This has hit recent university graduates particularly hard, with one Caixin commenter noting: “So many 2025 graduates were laid off — they lost both their jobs and their fresh graduate status.”

Beijing faces a difficult balancing act: promoting AI leadership while addressing rising youth unemployment. The government has warned that AI development would bring “inevitable” job losses but has pledged to create more than 12 million urban jobs in 2026 and keep the urban unemployment rate below 5.5% through 2030.

What’s Next

For Xiaomi, the key question is whether its EV business can achieve profitability or whether continued losses will force further restructuring. CEO Lei Jun has positioned EVs as the company’s next growth engine, but the division’s heavy operating losses and declining deliveries raise concerns.

For Meituan, CEO Wang Xing stated on the Q1 2026 earnings call that unit economics in food delivery were expected to improve significantly in Q2 2026, provided competition remained rational. The company maintains over 60% market share in food delivery, but at the cost of profitability.

Globally, tech layoffs in 2026 have affected nearly 120,000 employees worldwide, with about 20.4% explicitly linked to AI and automation. The Xiaomi and Meituan cuts underscore a fundamental reality: China’s tech giants are reshaping their workforces for an AI-driven future, and the transition is proving painful for thousands of workers.