Xiaomi’s Chip and SUV Offensive Fails to Reverse Stock Slide Amid Memory Cost Surge and Delivery Doubts

Xiaomi's stock nears 52-week low despite HK$20B buyback, in-house processor, and new hybrid SUV; Q1 revenue drops 10.9% as memory costs surge.

The mismatch between Xiaomi’s grand ambitions and its market reality has rarely been starker. The Chinese electronics and electric-vehicle maker is pushing ahead with an in-house processor, a new hybrid SUV brand, and a record HK$20 billion buyback — yet its shares have slumped to within a whisker of a 52-week low. The stock now trades at €2.56, just above the trough of €2.51, after shedding around 43% since the start of the year.

Investors have been unimpressed by the company’s aggressive diversification. In the second half of 2026, Xiaomi will launch the Xuanjie processor, manufactured by TSMC and targeting Qualcomm-level performance. The chip will debut in the MIX Fold 5 folding smartphone. Management is also pivoting in the auto business, securing regulatory approval for range-extender electric vehicles — a technology it had previously rejected. The new models will sit under the Skynomad sub-brand, starting with the large family SUV Kunlun, priced at roughly 200,000 yuan. The move aims to shield Xiaomi’s sporty image while undercutting rivals.

The financial pressures battering the stock, however, are building from multiple directions. First-quarter revenue fell 10.9% year on year to 99.1 billion yuan, missing analyst expectations of 103.4 billion yuan. Adjusted net profit tumbled 43.1% to 6.07 billion yuan. The main culprit is the memory-chip market: DRAM prices for smartphones have quintupled, while TV memory costs have surged tenfold. CEO Lei Jun has warned that this pressure will persist for at least another two years.

Xiaomi’s electric-vehicle division is adding to the pain. Operating losses reached 3.1 billion yuan in the first quarter — roughly US$5,600 per vehicle delivered — after two quarters of breakeven. The automotive gross margin slipped from 23.2% to 20.1%. Meanwhile, the company’s full-year delivery target of 550,000 units looks increasingly optimistic. It had delivered just over 150,000 vehicles by the end of May, meaning it needs monthly records for the rest of the year to hit that goal. Jefferies has already lowered its forecast to 495,000 units and trimmed the valuation multiple for the EV segment.

Short sellers have taken note. The short interest in Xiaomi’s freely traded shares has climbed to around 9%. The stock’s relative strength index has sunk to 21.3, deep in oversold territory, but analysts say that concrete catalysts — such as easing memory prices or stronger EV delivery numbers — are needed for a lasting recovery.

Xiaomi has tried to shore up confidence with its largest-ever buyback mandate, announced on June 2. The program allows up to HK$20 billion in Class-B share repurchases over 12 months, with a special regulatory exemption permitting purchases even during blackout periods before quarterly results. The company has already bought 30.1 million shares for around HK$298 million in a single session, and activated a further tranche of up to HK$4 billion. A previous buyback program retired roughly 399.6 million shares worth HK$14.6 billion. Yet the stock has continued to slide, losing about 25% in the past 30 days.

Management is not cutting back on investment. Research-and-development spending rose 33.4% in the first quarter to 9.0 billion yuan, and the full-year R&D budget stands at 40 billion yuan. The company now employs 26,048 staff in R&D.

The next crucial test will come on August 26, when Xiaomi reports its second-quarter results. Before then, June vehicle delivery figures will offer a clearer signal on whether annual targets remain realistic. For now, the market is waiting for hard evidence that the chip and SUV strategy can translate into earnings — rather than just headlines.