Xiaomi's Double Squeeze: Memory Costs and EV Subsidy Cuts Trap Stock Near Low

Xiaomi stock near 52-week low as memory chip prices surge 50% and EV unit posts 3.1B yuan loss, with oversold conditions but strong resistance at EUR 3.06.

Xiaomi's stock is fighting for survival on two fronts. Trading at EUR 2.60, the shares sit just 11% above a 52-week low of EUR 2.34, having shed 42% since the start of 2025 and 60% from the September 2025 peak. The company's record buyback programme has done little to stem the bleeding as both its smartphone and electric-vehicle businesses face simultaneous margin pressure.

The immediate headache is a surge in memory-chip prices. DRAM and NAND costs are expected to climb 50% in the third quarter of 2026, with another 30-40% rise possible in Q4, according to analysts at Jefferies and UBS. Relief on the procurement side is not seen before 2028. Xiaomi's Redmi line — which has sold over 500 million units globally — is built on aggressive value pricing, making the inflation a direct threat to profitability. Jefferies' Edison Lee, who cut his rating on Xiaomi to Underperform from Hold, estimates memory prices have already jumped roughly 100% year-over-year, complicating the company's margin targets for handsets.

Compounding the chip problem, Xiaomi's EV division is losing money again. After two profitable quarters, the automotive unit swung to an operating loss of 3.1 billion yuan in the first quarter of 2026. Gross margin slipped to 20.1%, and president Lu Weibing has acknowledged that full-year auto margins will not top those of 2025. The headwind comes from China's planned halving of purchase-tax subsidies for EVs, which are likely to trigger a fresh wave of price cuts across the industry. Xiaomi still aims to deliver 550,000 vehicles in 2026, but achieving that target without further margin erosion will be tough.

On the technical side, the stock is oversold. The relative strength index sits at 36.1, and the share has already bounced 5.8% in the past seven sessions. That move, however, remains a counter-trend rally within a bear market. The 50-day moving average at EUR 3.06 is the first serious resistance level, while the 200-day line at EUR 3.97 is far above current prices. A break below the recent low of EUR 2.34 would signal another leg lower.

Not all analysts have thrown in the towel. Goldman Sachs kept a buy rating, arguing that a sum-of-the-parts valuation reveals value beyond the near-term margin squeeze. The AIoT ecosystem and the services business — which delivered 6.9% revenue growth in the EV segment, taking it to 19.9 billion yuan — offer some compensation. The buyback, meanwhile, may cushion short-term volatility but does not fix the fundamental doubts.

The next catalysts come thick and fast. Xiaomi will launch the Redmi Note 17 series in China this month, with premium models featuring 200-megapixel cameras and large batteries. Pre-orders in the coming days will determine if the hardware refresh can reignite demand and absorb higher component costs. At the same time, the market is waiting for second-quarter results, due later this year, to see whether Lu Weibing's warning on automotive margins materialises fully or whether countermeasures are already gaining traction. For now, the stock is caught between a memory-chip vise and an EV subsidy squeeze — and neither shows signs of letting up.