Xiaomi’s Memory Chip Warning Casts a Long Shadow Over Q1 Earnings and Buyback Hopes

Xiaomi CEO Lei Jun warns memory chip costs to climb for two years, making smartphone price hikes structural. Stock down 46% YoY, but automotive growth and share buyback plan may offset.

Xiaomi’s CEO Lei Jun delivered an unusually blunt message at the company’s 17 Max launch event: smartphone buyers should pull forward their purchases if they upgrade annually. The reason is a supply-chain headache that looks set to linger. Lei Jun warned that costs for memory chips could keep climbing for at least another two years, making price hikes a structural problem rather than a short-term hiccup.

The flagship 17 Max, which Xiaomi will begin selling in China on May 25, carries a starting price of 4,299 yuan after state subsidies — or 4,799 yuan without the subsidy. The company is banking on supply-chain efficiencies and technical improvements to cushion the blow from pricier components. But the pressure is already visible across the industry. Xiaomi raised prices on several models in April, adding 200 to 400 yuan to many smartphones since March. Rivals OPPO and vivo have followed suit. President Lu Weibing sees a broader trend: he expects multiple Chinese premium flagships to breach the 10,000-yuan threshold later this year.

The stock market has not been forgiving. Xiaomi shares closed at €3.32 on Friday, up a marginal 0.32% on the day but down 26.16% year to date. Over the past twelve months the stock has lost 45.68%, leaving it just above its recent low. Technically, the picture is still weak: the closing price sits below the 50-day moving average of €3.50 and a full 25.38% below the 200-day line at €4.44. The relative strength index stands at 75.8, signaling overbought conditions in the short term, yet the broader trend remains firmly bearish.

That weakness reflects a core business under strain. Xiaomi’s smartphone and AIoT segment generated 351.2 billion yuan in 2025, accounting for roughly 77% of total group revenue. Yet the smartphone gross margin slid from 12.6% to 10.9% last year, squeezed by lower domestic subsidies, rising component costs, and fierce competition. Analysts will be watching closely when Xiaomi reports its first-quarter results on Tuesday at 7:30 p.m. Beijing time, followed by an investor webcast. The comparison base is punishing: full-year 2025 revenue rose 25% to about 457 billion yuan, while adjusted net profit jumped sharply. The fourth-quarter performance of the EV and AI segment alone posted revenue growth of over 123%.

The automotive pivot stands out as the most obvious counterweight. Xiaomi aims to deliver 550,000 vehicles in 2026, up roughly 34% from the roughly 410,000 units projected for this year. A strong showing in that division could give the stock some breathing room against the drag from smartphones. The product event also showcased the electric SUV YU7 GT alongside the Band 10 Pro, clip-on earphones, and home appliances — all signals that Xiaomi is casting a wider net.

Further support may come from the balance sheet. On June 2, Xiaomi will hold its annual general meeting in Beijing, where the board is seeking authorization to buy back up to 10% of outstanding shares. That translates to a maximum of 2.58 billion shares. The agenda also includes a resolution for potential new share issuance. For external catalysts, the National Bureau of Statistics will release the latest purchasing managers’ index at the end of May, offering a read on China’s economic pulse.

For now, the memory chip outlook remains the single biggest threat to sentiment. If component costs continue to rise through 2026 as Lei Jun outlined, the smartphone margin story could worsen before it improves. That makes Tuesday’s earnings call — with its focus on margin details and EV momentum — a critical test for a stock that has already lost more than a quarter of its value this year.