Xiaomi Stock Rides Sky Nomad Optimism, But Memory-Chip Storm Darkens the Horizon

Xiaomi shares jumped 9% on its first EREV launch, but a memory-chip cost surge has squeezed smartphone margins, leaving the stock down 37% year-to-date.

Xiaomi shares surged more than 9% on Wednesday as the Chinese tech group unveiled a bold push into the range-extender electric vehicle market, but the rally masks a deeper structural problem that has erased over half the stock’s value in the past year. The stock closed at €2.83, up from €2.58 the previous day, after touching as high as €2.85 during the session. Yet even with the bounce, the shares remain down 37% year-to-date and 56% below the 52-week peak of €6.51 set last September.

The catalyst for the move was the official presentation of the “Sky Nomad,” Xiaomi’s first extended-range electric vehicle (EREV). The 5.3-metre model, scheduled for launch in the second half of this year, combines a 1.5-litre turbo petrol engine with a battery pack to deliver a total range of over 1,500 kilometres, with 500 kilometres on electric power alone. The N90, as the project is code-named, takes aim at the family SUV segment and marks a decisive departure from Xiaomi’s single-model SU7 strategy. Management is targeting 550,000 vehicle deliveries for the full year, having already shipped 169,000 units in the first half and nearly 33,000 in May alone.

That EV expansion is urgently needed to offset a brutal margin squeeze in Xiaomi’s smartphone core business. Memory-chip costs, which account for 15–20% of a mid-range phone’s bill of materials, have soared nearly fourfold year-on-year in the first quarter. Xiaomi president Lu Weibing disclosed at the Mobile World Congress that a combination of 12GB of RAM and 256GB of storage that bottomed out at around $30 now costs between $120 and $130. The culprit is the AI-driven boom in high-bandwidth memory (HBM): Microsoft, Google, Meta and Amazon are vacuuming up advanced memory for data-centre chips, prompting Samsung, SK Hynix and Micron to divert cleanroom capacity away from the LPDDR5X parts that power everyday smartphones.

The pain is concentrated among volume-oriented brands that live on thin margins. Xiaomi’s Redmi line has sold over 500 million units worldwide on aggressive pricing, but that formula is now under direct attack. In its home market, the company has already lost 35% of its market share as new core models struggle without the promotional support their predecessors enjoyed. Huawei, by contrast, has climbed to a 20% share in China in the first quarter, its highest since late 2020, thanks to domestic suppliers who offer a cost buffer that Xiaomi, reliant on imported memory components, lacks.

The memory-price headache shows no sign of easing soon. IDC and Counterpoint Research both expect stable pricing only in the second half of 2027, meaning the margin strain is a multi-year reality rather than a passing headache. That leaves Xiaomi’s high-growth EV division with the task of absorbing the pressure without dragging down group profitability—a tall order in a Chinese EREV market already notorious for cut-throat competition. The Sky Nomad’s target price range goes up to 450,000 yuan, and rivals like Li Auto are entrenched.

Wednesday’s technical snap-back offers little comfort to long-term holders. The stock’s annualised volatility stands at 43%, and the relative strength index has crept back to 54.1 from deeply oversold territory. The shares have climbed 20.7% from the 52-week low of €2.34 hit on June 26, but they still trade 6.5% below the 50-day moving average of €3.02 and a daunting 27.9% under the 200-day line at €3.92. A sustained break above the €3.00 level is seen as the first meaningful test of whether the rally has legs.

All eyes are on late July, when the company is expected to release detailed specifications for the new vehicle series, including battery-supply arrangements with partners Sunwoda and CALB, as well as final pricing. Operationally, the bar is high: to meet the annual delivery goal, monthly output must consistently exceed 30,000 units. For now, Xiaomi remains a tale of two conflicting forces—a promising EV offensive battling a structural cost crisis that no amount of investor optimism can quickly resolve.