Xiaomi's Q2 net profit fell 42.6% to 6.2 billion yuan as AI-driven chip competition pushed memory prices up and weak consumer demand persisted. The company has raised smartphone prices three times this year and faces severe margin pressure (8.5% vs. 11.5% YoY). Its EV venture—critical for future growth—generated losses of 2.6 billion yuan despite 16% revenue growth, while EV sales track at only 40% of the 550k-unit annual target. The broader smartphone market contracted 11% globally in Q2 (lowest since 2013), with Chinese brands (Xiaomi, Oppo, Vivo) hit harder than Apple/Samsung. Management expects memory prices to rise further but at a slower pace in H2.