The Chinese tech giant is living a tale of two industries. Its electric vehicle division is sprinting ahead with record deliveries and a flashy new model, while its core smartphone business is being hammered by a brutal spike in component costs. The result is a stock that has lost nearly a quarter of its value this year, caught between a promising future and a painful present.
The Memory-Chip Shockwave
The culprit behind the smartphone slump is a sudden and severe surge in DRAM prices, which soared roughly 90% quarter-on-quarter in the first three months of 2026. Xiaomi, along with domestic rivals OPPO and Vivo, chose to pass these costs on to consumers, hiking prices on select models by as much as 30%. Apple and Huawei, by contrast, absorbed the hit. The market punished the price-hikers and rewarded the holdouts: Apple’s shipments jumped 42% in the same period.
The fallout for Xiaomi was stark. Global smartphone shipments tumbled 19.1% in the first quarter, according to IDC data. The broader market contracted by a more modest 4.1% to 289.7 million units, meaning Xiaomi lost significant ground. Its global market share slipped from 13.8% to 11.7%. In its home market of China, the company landed in fifth place with 8.7 million devices shipped.
Xiaomi’s management has acknowledged that the surge in memory-chip costs has been both longer and more severe than anticipated, leaving little choice but to pass the burden to customers.
A New AI Agent Enters the Fray
Amid the headwinds, Xiaomi is accelerating its artificial intelligence push. Its mobile AI agent, Miclaw, has become one of the first systems to pass the evaluation of China’s regulator, the CAICT. Built on Xiaomi’s proprietary MiMo language model, the agent is designed to weave together the company’s sprawling ecosystem of smartphones, PCs, vehicles, and smart-home devices, executing complex tasks via voice commands.
The beta phase kicked off in March 2026. Shortly after, CEO Lei Jun announced a commitment to invest at least $8.7 billion in AI over the next three years, with more than 16 billion renminbi earmarked for AI initiatives in 2026 alone.
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The EV Engine Revs Up
The real bright spot is Xiaomi’s automotive division. In the first quarter, Xiaomi Auto delivered an estimated 80,000 vehicles. The unit turned profitable as early as November 2025, just 18 months after entering the market. The full-year target for 2026 stands at 550,000 vehicles.
The company used the Auto China 2026 show in Beijing to flex its muscles. Alongside the second-generation SU7 and the YU7 SUV, Xiaomi unveiled the YU7 GT, a new model set to debut at the end of May. Industry outlet CarNewsChina expects a price tag of up to 500,000 yuan. Lei Jun is positioning the brand firmly in the premium segment, with an aggressive front design and a new “Cherry Red” color. The company has ruled out budget vehicles for the next decade, instead setting its sights on Porsche and Tesla.
Last year, Xiaomi’s debut model, the SU7, actually overtook the Tesla Model 3 in Chinese deliveries. For 2027, the company is preparing to enter the European market, with Spain’s prime minister recently visiting the Beijing headquarters, signaling potential production ambitions there.
A Stock Under Pressure
These automotive successes have done little to lift the share price. The stock recently traded at €3.41, just above its 52-week low of €3.38 hit on April 15. From its all-time high in the spring of 2025, the shares have shed more than half their value. The stock recently slipped below its 20-day moving average, a technical signal that analysts interpret as a reflection of persistent investor skepticism in the fiercely competitive EV sector.
To shore up growth, Xiaomi is also expanding its powertrain strategy. After operating purely on battery-electric vehicles, the company is now preparing EREV (extended-range electric vehicle) models, entering the hybrid space. It plans to launch four to six new models this year in the price range starting at 200,000 yuan.
Whether the EV division’s momentum can eventually offset the persistent weakness in smartphones will become clearer when the next quarterly results are released. For now, Xiaomi is a company with one foot on the accelerator and the other on the brake.
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