Xiaomi Slashes 2026 Smartphone Target by 40 Million Units as Memory Chip Crisis Deepens; Stock Recovery Pauses

Xiaomi cuts 2026 smartphone target by 30% amid soaring memory-chip costs. Stock near 52-week low as net profit plunges 57%. Price hikes fail to offset supply crunch.

The stock may have clawed back 9.16% over the past seven trading days, but Xiaomi’s underlying business is under siege from a hardware shortage that shows no sign of easing. The company has slashed its 2026 smartphone sales target from 135 million units to around 95 million — a 30% cut — as soaring memory-chip costs and supply constraints force a strategic retreat from volume growth.

At €2.80, the shares remain close to their 52-week low of €2.34, set on June 26, 2026. That recent rally, which brought the stock nearly 20% off the trough, appears technically driven rather than grounded in a fundamental turnaround. Year-to-date, Xiaomi has lost roughly 38% of its value, and over the trailing twelve months the decline has been even steeper at 55%.

The culprit is a structural shortage of DRAM and NAND memory chips, driven largely by the explosive build-out of AI infrastructure. A single Nvidia AI processor consumes significant volumes of power-efficient memory, and cloud giants have locked up large portions of supply through long-term contracts. Smartphone makers like Xiaomi are left scrambling for allocation, with chip costs roughly doubling year-on-year.

The impact was laid bare during China’s mid-year shopping festival in June, when nationwide smartphone sales fell 13%, according to Counterpoint Research. Xiaomi fared even worse, posting a 24% drop in unit sales during the promotional period — the worst performance among major brands. Only Huawei managed to grow in that environment. Manufacturers, forced to pass on higher component costs, sharply reduced discounts, pushing up prices for both new and older models.

That price trend is set to continue. Gartner forecasts that global smartphone prices will rise about 13% in 2026, and that supply tightness and elevated memory costs will persist at least through the end of 2027.

Xiaomi’s first-quarter financial results already signal the damage. Net profit collapsed 57% to 4.72 billion yuan, while revenue dropped into double digits for the first time in nearly three years, coming in at 99 billion yuan — both figures missing analyst estimates by a wide margin. The smartphone division’s gross margin has become the single most important metric to watch in the second-quarter report due later this year.

Management has attempted to fight back by raising prices on several models by 200 to 400 yuan per device since March. Competitors OPPO and vivo have followed suit. CEO Lei Jun even publicly urged customers to pull forward purchases, arguing that memory costs are likely to rise for at least another two years — a rare example of candid supply-chain communication designed to discourage discounting.

Analyst opinion remains divided. Goldman Sachs kept a buy rating on the stock but trimmed its 12-month price target from 41 to 40 Hong Kong dollars, citing a sum-of-the-parts valuation and confidence in the electric-vehicle delivery ramp. The company’s multi-billion-dollar share buyback program also signals management’s belief that a floor is forming.

On the bearish side, Jefferies analyst Edison Lee downgraded Xiaomi from hold to underperform, with a target of 25.49 Hong Kong dollars, pointing to weak operating earnings and structural cost pressure from memory chips. Zephirin cut its target to 25 Hong Kong dollars and maintained a sell rating, highlighting deteriorating EV margin assumptions and heightened valuation risk from China’s electric-vehicle price war.

Indeed, the EV and AI segment — once the company’s growth hope — recorded an operating loss of 3.1 billion yuan in the first quarter, reversing a profit in 2025. The backslide undermines the narrative of a self-sustaining auto business, even as Xiaomi raises its 2026 EV delivery target to 550,000 units, about 34% above the original plan.

For now, the stock is likely to oscillate between its 52-week low of €2.34 and the 50-day moving average near €3.01, constrained by the memory-chip bottleneck. A sustained breakout would require both successful price hikes without heavy sales losses and a containment of EV unit losses, with the 100-day moving average at €3.32 as the next upside target. Failure on either front risks another test of the year’s lows. The second-quarter earnings report, due in the third quarter, will provide the first hard data on whether Xiaomi’s margin strategy is working.