Xiaomi's Record Buyback Misses the Target as Smartphone and Auto Woes Pile Up

Xiaomi's 70th buyback fails to stop 35% decline; smartphone sales fall, DRAM costs jump 63%, EV burns $5,600 per vehicle; SpaceX IPO liquidity squeeze adds pressure.

The most striking measure of Xiaomi’s current crisis may be the scale of its own defensive moves. The company bought back 7.8 million shares yesterday, marking the 70th such transaction this year. A fresh HK$20 billion repurchase programme launched at the start of June was meant to signal confidence. The stock closed at €2.90, barely a whisker above its 52-week low of €2.82 tested just last Thursday. Since January, the equity has shed over 35% of its value — buyback billions vaporising into thin air.

The smartphone business, Xiaomi’s traditional cash cow, is bleeding from multiple wounds. Inventories have swelled to an estimated 20–30 million unsold handsets, weighing heavily on the balance sheet. In China, first-quarter shipments tumbled 35% to just 8.7 million units — the steepest drop among the global top-five handset makers. Revenue for the period fell 11% to 99.14 billion yuan, while adjusted net income cratered 43%. Goldman Sachs has warned of a weak second quarter, pointing to softening demand across the Android segment.

A brutal spike in component costs is compounding the pain. Analysts expect conventional DRAM prices to surge up to 63% in the second quarter, with NAND flash becoming roughly 75% more expensive. Xiaomi’s traditional stronghold in mid-range and budget smartphones leaves razor-thin margins that cannot absorb such shocks. The only way to pass on higher costs is to raise retail prices — a move that has already begun to push price-sensitive consumers to the sidelines.

The automotive division, billed as the next growth engine, is burning capital at an alarming rate. The segment posted an operating loss of 3.1 billion yuan in the first quarter — roughly $5,600 lost per vehicle delivered. Undeterred, management secured regulatory approval to produce extended-range electric vehicles and has filed to build cars with range extenders under a new sub-brand. The flagship SUV “Kunlun” is slated for the second half of 2026, targeting the high-margin family segment. The full-year delivery target sits at an ambitious 550,000 units, a hefty jump from last year. Yet the broader market for these models is already shrinking: wholesale sales in China fell nearly 25% in May.

On the technology front, Xiaomi is ploughing billions into its own processor, the “Xuanjie O1,” developed since 2021 and set to be manufactured at TSMC on a 3-nanometer process. The goal is to break free from dependence on US suppliers such as Qualcomm and eventually compete with Apple and Samsung. The project is a multi-year, multi-billion-dollar bet — one that will not contribute to profits any time soon.

Beyond company-specific pressures, a curious cross-current is at play. Analysts at Vanda Research note that retail investors are unloading established tech names to raise cash for the upcoming SpaceX initial public offering. This liquidity squeeze has hit Xiaomi at a particularly vulnerable moment, amplifying the selling pressure from nervous institutional holders.

Technically, the stock looks stretched. The relative strength index sits near 31–32, signalling an oversold condition. The gap to the 200-day moving average of €4.23 — a distance of more than 31% — underscores how extended the downtrend has become. But the RSI alone offers no guarantee of a reversal. A stock can remain oversold for long periods when fundamentals are deteriorating. The €2.82 support line is now a make-or-break level; a decisive break below it would likely trigger a fresh wave of technical selling.

The big unanswered questions remain. Can a torrent of buyback cash hold a floor under the shares until the operating picture improves? When will the smartphone margin squeeze ease? And will the auto gamble ever deliver the profits management promises — or merely deepen the losses? Until the next quarterly report offers concrete answers, the support-buying strategy looks more like a holding operation than a turnaround.