The tension between Xiaomi’s aggressive growth push and the market’s demand for profitability has rarely been starker. The company’s electric vehicle deliveries are accelerating, its smartphone ecosystem is expanding with new software, and it has ploughed nearly 7.4 billion Hong Kong dollars into share buybacks this year alone. Yet the stock continues to slide — a sign that investors are focused on one critical question: can Xiaomi protect its margins while funding an automotive ramp-up and absorbing a brutal surge in memory chip costs?
Cost Headwind in the Core Business
The first and most immediate pressure comes from memory chips. DRAM contract prices surged by as much as 95% in the first quarter of 2026 compared with the previous quarter, while NAND flash prices jumped 55–60%, according to industry tracker TrendForce. The culprit is insatiable demand from AI servers, which is sucking capacity away from consumer electronics.
That hits Xiaomi where it lives. The company’s hardware-heavy model — smartphones, TVs, tablets — relies on these components, and passing higher costs on to customers without losing share is a delicate act. Qualcomm has already warned of chip shortages, and Dell is planning to raise prices on commercial PCs. Xiaomi now faces the same unenviable calculus.
EV Ramp Picks Up Speed
On the automotive side, the news is better — but the financial pressure is intensifying. Xiaomi delivered 36,702 electric vehicles in April alone, of which 26,826 were the SU7 sedan. Since January, cumulative deliveries have reached 117,558 units.
That pace is solid, but still short of the full-year target. To hit 550,000 vehicles, Xiaomi would need to average roughly 55,000 deliveries per month from May through December. Its current monthly record stands at 50,000, so the goal remains ambitious. The company has clear demand, but the margin on each car will be the deciding factor.
One major lever is battery costs. Xiaomi has founded Beijing Xiaomi Jingxu Technology to build a battery plant with an annual capacity of 15 gigawatt-hours. Batteries represent one of the largest cost components in an EV, and bringing production in-house could give Xiaomi more control over pricing and integration, while reducing reliance on CATL and BYD’s FinDreams Battery, which together commanded a 54.4% share of the traction battery market in the first quarter.
Europe Beckons, but Not Yet
Xiaomi is also laying the groundwork for a European entry. It has opened a research and development centre in Munich, headed by Rudolf Dittrich, with Claus-Dieter Groll overseeing vehicle dynamics — both managers come from BMW. The European launch is scheduled for the second half of 2027, with right-hand-drive markets following in the first half of 2028. The move signals long-term ambition, but it won’t contribute to the bottom line anytime soon.
Should investors sell immediately? Or is it worth buying Xiaomi?
TV and Software: Holding Pattern
In its traditional consumer electronics business, Xiaomi held its ground. In China’s shrinking TV market — which fell 6.1% year-on-year to 2.22 million units in April — the company shipped around 400,000 sets, keeping its fourth-place position. The top eight domestic brands now control over 95% of the market, while international players like Samsung and Sony continue to lose share. Xiaomi benefits especially in the price-sensitive online channel.
Meanwhile, the beta test of HyperOS 3.1, based on Android 16, is underway on models including the Redmi K70, Xiaomi 15T and POCO F6 Pro. The rollout in Europe and India is meant to deepen user loyalty to Xiaomi’s ecosystem — a strategic move as it tries to gain ground in the premium smartphone segment.
Stock Paints a Grim Picture
None of this operational activity is lifting the share price. On Friday, Xiaomi stock closed at €3.37, down 3.46% on the day. That leaves it nearly 25% below its 200-day moving average of €4.50 and roughly 50% below its 52-week high of €6.69. Since the start of the year, the stock has lost 24.90%.
Buybacks have provided some support. By April 24, Xiaomi had repurchased shares worth 7.4 billion Hong Kong dollars — already exceeding the 6.3 billion Hong Kong dollars spent on buybacks in all of 2024. But the market seems to need more than a floor under the stock.
Q1 Report as a Litmus Test
All eyes are now on the board meeting scheduled for May 26, when Xiaomi will review and approve its unaudited first-quarter results. Analysts project revenue between 99.07 billion and 101.06 billion renminbi. JPMorgan expects adjusted net profit to beat consensus estimates, which would provide a short-term boost — but the core concern remains the profitability of the smartphone business, which must continue generating the cash that the EV division is consuming.
The market will be watching closely for signs that Xiaomi can juggle rising memory costs, an aggressive automotive ramp, and an expanding ecosystem without compromising earnings. One week after the earnings release, the annual general meeting in Beijing will address mandates for future share issuance and additional buybacks — further signals of how management plans to steer through this high-stakes balancing act.
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