Xiaomi's Class-B Shareholders Cry Foul on Dilution as Company Gears Up for September Chip Offensive

Nearly 37% of Xiaomi Class-B shareholders opposed share issuance mandate; stock down 30% YTD. R&D spending surges 33% as Xiaomi develops own 3nm chip, but profits plunge 43%.

Nearly 37% of Xiaomi's Class-B shareholders voted against a general share issuance mandate at the company's annual general meeting — a level of dissent that the weighted voting structure ultimately buried, but one that signals deepening unease among minority investors. The buyback mandate, by contrast, sailed through with roughly 99.9% support from Class-B holders, highlighting a clear preference: buy shares, don't issue them.

The dual-class structure, where each Class-A share carries ten votes, meant the issuance mandate still passed with 94.4% overall approval. A companion resolution extending the issuance authority to cover repurchased shares faced similar opposition — about 36% of Class-B votes against, yet an overall 94.6% yes. The message from ordinary shareholders was unambiguous: the prospect of dilution, even if backed by the controlling vote, is unwelcome.

Those governance jitters come as Xiaomi races toward what is shaping up to be its most technically ambitious product cycle in years. The Xiaomi 18 series is expected to launch in China in September, and the company plans to be the first to market with Qualcomm's Snapdragon 8 Elite Gen 6 chip. The standard model will feature a flat 6.4-inch display with 2K resolution. However, the Ultra variant has been temporarily paused due to rising component costs, leaving the line-up as a two-model affair of standard and Pro for now — with the Ultra likely arriving later at a price possibly exceeding 10,000 yuan.

Under the hood, the groundwork is even more significant. From June, Xiaomi will begin manufacturing its proprietary "Xuanjie O3" processor at TSMC using a 3-nanometer process, making it the first mainland Chinese company — and the fourth worldwide — to produce a smartphone chip at that node. The company claims a 15% or greater IPC improvement and a peak-performance boost of over 30% compared to its predecessor. The chip will debut in the MIX Fold 5 foldable. Separately, president William Lu confirmed that an enhanced version of the in-house XRING chip is due later this year, featuring a novel prime-core, titanium-core, and little-core architecture.

All this Research & Development firepower comes at a cost that is now visible in the income statement. R&D expenditure surged 33.4% year-on-year to 9.0 billion yuan in the first quarter of 2026. But revenue fell to 99.1 billion yuan from 111.3 billion yuan a year earlier, and adjusted net profit tumbled 43.1% to 6.1 billion yuan. The unadjusted net profit figure dropped even more sharply — by 57% to 4.7 billion yuan — and both metrics missed analyst expectations.

Shareholders have already voted with their feet. The stock trades at €3.15, barely above its 52-week low of €3.04, having shed roughly 30% since the start of the year and about 47% over the past twelve months.

The board itself did not escape shareholder scrutiny either. While Liu De was re-elected as executive director with 98.8% approval, independent non-executive director Wong Shun Tak received only 87.8% support. Auditor PricewaterhouseCoopers fared worse, garnering just 84.6% overall — and nearly 24% of Class-B votes were cast against the reappointment. That is hardly a vote of confidence for the company's oversight.

The AGM outcome now poses a concrete test for management. If the buyback mandate is deployed aggressively, it may soothe frayed nerves among Class-B investors. But if the issuance authority gets used — especially given the heavy capital demands of the 3nm chip ramp and the September product blitz — the dissent seen at the meeting could escalate well beyond proxy voting.