Xiaomi Launches Share Buyback to Counter Market Pessimism

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Investors in Xiaomi have endured a period of significant volatility, prompting the company's leadership to take decisive action. In a move to bolster investor confidence and support its valuation, the Chinese technology giant has unveiled a substantial share repurchase initiative. This comes as the firm's burgeoning electric vehicle division shows remarkable promise, while its core smartphone business continues to navigate substantial headwinds.

In response to a pronounced downward trend in its share price, Xiaomi is committing significant capital. The company announced an automatic share buyback program with a maximum value of 2.5 billion Hong Kong dollars (approximately $320.6 million USD), set to commence officially on Friday, January 23, 2026. Market analysts interpret this aggressive action as a strong statement: management believes the stock is undervalued and is directly confronting negative market sentiment.

The need for intervention is clear. Since the start of the year, Xiaomi's shares have declined by 11.63%, and the gap to their 52-week high has widened to more than 41%. The announcement provided immediate support, with the stock outperforming the Hang Seng Tech Index in early trading.

Smartphone Segment Faces Persistent Pressure

However, the company's traditional foundation is under strain. The global smartphone division, Xiaomi's core business, is grappling with a shortage of memory chips, which is driving up production costs. As suppliers increasingly allocate capacity to serve the booming artificial intelligence sector, the availability of components for conventional consumer electronics is tightening further.

This industry-wide dynamic is placing noticeable pressure on profit margins and currently represents the most significant risk to Xiaomi's overall profitability. While the share repurchase may offer short-term relief, the long-term trajectory will hinge on whether growth in other areas can offset these challenges.

Electric Vehicles Emerge as a Growth Engine

Fundamentally, much of the optimistic outlook is anchored in the performance of the automotive unit, which is rapidly establishing itself as the primary growth driver. The company has reported several key milestones:
* The updated SU7 model received close to 100,000 pre-orders within a two-week period.
* Xiaomi exceeded its own annual delivery target in 2025, with over 411,800 vehicles shipped.
* For 2026, the company has raised its delivery goal to 550,000 units.

This robust momentum stands in stark contrast to the sentiment surrounding other parts of the business and underscores the EV division's potential to fuel future revenue streams. The upcoming market launch of the new SU7 generation in April 2026 is poised to be the next critical indicator of this segment's strength and its ability to compensate for smartphone sector pressures.