The timing could hardly be more awkward. Xiaomi is days away from launching its most technically ambitious smartphone in years, yet the financial picture it carries into that debut is the weakest in recent memory. The company’s second-quarter profit for 2026 fell 42.6 percent year-on-year, dragged down by softer revenue and thinning margins in the smartphone division that remains its core engine.
That contradiction — a product blitz built on a deteriorating base — is now the central question hanging over the stock, which trades at roughly half the level it commanded last autumn.
A Memory-Chip Alliance With Strategic Weight
The immediate catalyst for investor attention is supply-chain news rather than earnings. Chinese memory maker CXMT will supply the LPDDR6 DRAM chips for Xiaomi’s upcoming foldable flagship, a deal reported by Reuters on August 29. The device is slated for a September release, positioning Xiaomi among the first manufacturers globally to ship LPDDR6 memory in a commercial product.
The partnership carries significance beyond the component itself. Xiaomi has framed the arrangement as evidence of its growing independence from established chip suppliers, part of a broader push to control more of its own hardware destiny. For a company that has spent years trying to shed its image as an assembler of others’ technology, the CXMT tie-up is a tangible proof point in that narrative.
The Launch Calendar Tightens
The foldable’s official sales date is set for September 7, following its unveiling at the IFA trade show in Berlin. The Xiaomi 18 Fold introduces what the company calls a “Mid-Fold” form factor, pairing a 5.38-inch exterior display with a 7.58-inch interior panel. Under the hood sits the in-house Xring-O3 processor, alongside the HyperOS 4 operating system and an on-device AI model dubbed MiMo.
Chief executive Lei Jun has branded the month a “Big Tech Month,” with the Xiaomi 18 Pro series expected to follow before September ends. Compressing two flagship product lines into a few weeks signals how heavily the company is leaning on proprietary chip design and premium hardware to differentiate itself in a smartphone market where margins remain chronically thin.
The Earnings Reality Check
The financials tell a more sobering story. Revenue rose 9.9 percent quarter-on-quarter to 108.9 billion yuan but fell 6.1 percent from the same period a year earlier. The profit decline of 42.6 percent reflects both the smartphone softness and a pair of external pressures: rising costs for memory chips and the phase-out of government subsidies for electric vehicles in China.
The EV and new initiatives segment, at least, provided a counterpoint. Revenue there climbed 17.1 percent to 24.9 billion yuan, with electric vehicle deliveries up 28 percent. That growth, however, has not been enough to offset the drag elsewhere, and it carries its own complications.
Should investors sell immediately? Or is it worth buying Xiaomi?
Auto Ambitions Meet a Skeptical Market
Xiaomi’s vehicle division remains its most promising growth story, but the numbers raise questions about whether the company can hit its targets. Deliveries reached 185,000 units in the first half of the year — a pace that leaves the 2026 goal of 550,000 vehicles looking ambitious. Astrada Advisors downgraded its rating on the stock from buy to hold in July, citing precisely that gap.
Not all analysts share the caution. Bernstein’s banking analyst continues to favor Chinese EV names including Xiaomi and BYD, even after trimming price targets. The divergence underscores how much of the investment case now hinges on second-half delivery figures rather than the product pipeline itself.
A Stock Caught Between Two Narratives
The market’s response to the earnings release was telling. Shares fell 2.4 percent on Thursday, extending a downtrend that has left the stock down 30 percent since the start of the year. At its current level of 3.09 euros, the equity stands 53 percent below the 52-week high of 6.54 euros reached in late September of last year. Friday brought a modest 1.5 percent gain, but the broader trajectory remains firmly negative.
That slide reflects a fundamental tension. The smartphone business is bleeding margin, the auto division is consuming capital faster than it generates returns, and the cost environment — particularly for memory components — is working against the company. The CXMT deal may ease some supply-chain concerns, but it also highlights the very cost pressure squeezing profitability.
What the Foldable Must Prove
The September 7 launch therefore carries an outsized burden. Strong sell-through of the Xiaomi 18 Fold would give the market concrete evidence that the company’s premium strategy can command pricing power in a crowded field. Weak numbers would reinforce the view that Xiaomi’s technological ambitions are running ahead of its commercial realities.
For now, the CXMT partnership stands as the clearest signal of where Xiaomi wants to go: a vertically integrated hardware maker less exposed to the whims of established suppliers. Whether that vision translates into earnings recovery is a question the market will answer only after the foldable’s sales figures start landing.
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