Xiaomi Cuts 2026 Phone Target by 40 Million Units as Memory Shortage Squeezes; Sky Nomad Launch Provides Thin Silver Lining

Xiaomi cuts 2026 phone sales goal by 30% due to memory chip shortage driving stock down 38% YTD, while launching Sky Nomad EV SUV with 1,500 km range.

Xiaomi has slashed its 2026 smartphone sales target from 135 million to 95 million units, bowing to a structural shortage of memory chips that shows no sign of easing before 2027. The drastic revision, communicated to suppliers in recent weeks, underscores how the global AI infrastructure build-out is starving the handset industry of crucial components. During China’s June shopping festival, Xiaomi’s sales plunged 24% year-on-year, more than double the overall market decline of 13% recorded by Counterpoint Research.

The stock, which closed at €2.80 on Wednesday, has lost roughly 38% since the start of the year and trades 57% below its 52-week high of €6.51. A weekly gain of just over 9% offered modest relief, but the shares remain well within bear-market territory. Analysts at Gartner expect smartphone prices to rise about 13% industry-wide this year as manufacturers pass on higher procurement costs, leaving Xiaomi’s core business caught between margin compression and shrinking volumes.

Soaring prices for DRAM and NAND flash memory, driven by Nvidia’s insatiable demand for high-bandwidth chips in AI servers, have crowded out supply for consumer electronics. Cloud hyperscalers have locked up capacity through long-term contracts, putting handset makers at the back of the allocation queue. Xiaomi now plans to pivot toward a more profitability-focused strategy for its phone division, but the headwinds are expected to persist into 2027.

Against this grim backdrop, the company has rolled out its most ambitious counterpunch yet: a new extended-range electric vehicle line called Sky Nomad (Pengcheng in Chinese). The first model, a full-size SUV codenamed Kunlun N3 or N90, stretches over 5.3 metres and boasts a combined range of more than 1,500 kilometres, appealing to buyers who want electric driving without range anxiety. Official registration with the Ministry of Industry and Information Technology was granted on June 10, and the public unveiling took place on July 8. A technical presentation event is scheduled for late July, with market launch expected between mid-August and late August.

Xiaomi has reportedly pre-produced over 10,000 vehicles for the initial delivery wave, signalling its determination to scale quickly. The company delivered more than 30,000 cars for the third consecutive month in June, bringing first-half deliveries to 185,055 units. That performance underpins the full-year target of 550,000 vehicles, though the automotive division posted an operating loss of 3.1 billion yuan in the first quarter alone. The EV gross margin currently stands at 20.1%, and executives hope that rising production volumes will stabilise that figure in the second half.

The stock’s technical picture offers limited comfort. It trades 7.03% below its 50-day moving average of €3.02, a level that must be reclaimed to reverse the short-term downtrend. The relative strength index of 53.3 is neutral, while the 20% distance from the 52-week low of €2.34 leaves room for further downside if the Sky Nomad reception disappoints. Competition from established EREV players like Li Auto and Aito, both with proven supply chains and loyal customer bases, adds another layer of risk.

The next catalyst is the EREV platform technical event in late July, which will likely determine short-term direction. Strong pre-order numbers could trigger a sentiment shift and support a bottoming process. Yet the underlying tension remains unresolved: the company is betting on a capital-intensive EV ramp to offset a deteriorating smartphone business, and the margin squeeze on both fronts makes the timeline for reaching group profitability uncertain. If the August market launch runs smoothly, scale effects may start to offset the drag. If not, the stock’s annualised volatility of 41.71% ensures sharp moves in either direction.