Xiaomi Deploys Buyback Cash as Auto Push and Chip Costs Deepen the Pain

Xiaomi repurchases $201.9M in shares as stock plunges 52% YoY; smartphone sales drop 19% and auto venture posts $3.1B loss, while new Skynomad EV gets approval.

The tension inside Xiaomi has rarely been this visible. On Thursday, the company spent 201.9 million Hong Kong dollars to repurchase 7.8 million of its own shares, a move that underscores just how much the market has turned against it. Yet even as management tries to prop up the stock, the same forces that drove it to a 52-week low — a costly car-making venture, a memory-chip squeeze, and a shrinking smartphone business — continue to intensify.

The stock touched a fresh trough of €2.82 in Hong Kong trading before closing at €2.86. That leaves the shares down roughly 36% since the start of the year and more than 52% lower than 12 months ago. The Relative Strength Index has sunk to 29.8, a level that technical analysts typically regard as deeply oversold. The buyback, part of a program that authorises the repurchase of up to 20 billion Hong Kong dollars in shares over the coming months, is the most direct tool Xiaomi has to stem the bleeding.

Core earnings take a battering

The financial toll of the company’s transformation is laid bare in its latest quarterly results. Net profit in the first quarter collapsed by 57% compared with a year earlier, while revenue contracted to 99.1 billion yuan. The traditional smartphone engine is sputtering: global handset shipments dropped 19.2%, even though the average selling price climbed to a record 1,310 yuan, lifted by premium models such as the 17 Ultra. That price increase, however, has not been enough to offset the surge in costs for DRAM and NAND memory chips, which are eating directly into hardware margins.

Xiaomi’s strategy of selling phones on razor-thin margins to drive volume is proving a double-edged sword. The company is trying to pivot toward higher-priced flagships, but that shift takes time — time the stock market is not giving it. Meanwhile, the auto division, still in its infancy, is burning cash at a rapid clip, posting a first-quarter operating loss of 3.1 billion yuan.

The electric gamble rolls on

None of that has slowed the automotive push. The Chinese Ministry of Industry and Information Technology this week granted production approval for extended-range electric vehicles under a new sub-brand called Skynomad. Up to now, Xiaomi has only built pure battery-electric models like the SU7 and the YU7. The first Skynomad model will be a large family SUV — over five metres long — with a pure-electric range of up to 500 kilometres. It is scheduled to launch in the second half of 2026, directly targeting rivals such as Li Auto and Aito.

The company’s stated delivery target for this year stands at 550,000 vehicles, a goal that requires both strong demand and smooth production. To defend its share in a cutthroat Chinese auto market, Xiaomi has been subsidising some of its own vehicles, further squeezing its cash.

Between a shrinking phone business and a money-losing car venture, the buyback is a stopgap — not a solution. The real test will come when the Skynomad SUV reaches showrooms. Until then, investors are left weighing a grand vision against a balance sheet under siege.