Xiaomi's Autumn Balancing Act: A Foldable Flagship With Homegrown Memory, While the Core Business Bleeds

Xiaomi's Q2 profit fell 42.6% amid smartphone slump, but the 18 Fold's CXMT LPDDR6 chip and EV growth signal a strategic pivot.

The 18 Fold is shaping up to be more than just another premium handset. When Xiaomi unveils the device in September, it will carry a first-of-its-kind component: LPDDR6 memory chips supplied by Chinese manufacturer CXMT, a partnership the company confirmed on Weibo on Friday. The move hands Xiaomi early access to a new memory generation — CXMT claims transfer rates of up to 12,800 megatransfers per second in a 16-gigabyte-per-chip configuration — and pairs it with the company's in-house Xring O3 processor, built on a 3-nanometer node and capable of driving the memory at 113.8 gigabytes per second.

The timing is no accident. Xiaomi's second-quarter results, released on August 18, painted a sharply divided picture: revenue that edged past consensus, a profit figure that missed by a wide margin, and a smartphone division that continues to hemorrhage volume. The stock closed Friday at EUR 3.07, up 2.4% on the day, but that bounce does little to mask a 15% decline over the past 30 days — or a 53% gap from the 52-week high of EUR 6.54 set last September.

The Numbers Tell Two Stories

Group revenue landed at 108.922 billion yuan for the quarter, marginally ahead of the 108.325 billion yuan analysts had penciled in, though still down 6.1% year on year. The damage was concentrated in the bottom line: adjusted net income fell 42.6% to roughly USD 920 million, while gross margin contracted to 19.8% — shy of the 20.4% expected.

The culprit is the smartphone business, Xiaomi's traditional engine. Shipments dropped 26% to 31.2 million units in the quarter, extending a slide that began in Q1, when handset revenue fell 12.1% and adjusted net profit tumbled 43.1%. Nomura analysts, who reaffirmed their "Neutral" rating on the stock on August 19 and 21, attributed the revenue beat to a 26% jump in average selling prices for smartphones and stronger IoT sales — but flagged lingering concerns about margin pressure in the handset segment.

The EV Counterweight

Offsetting the smartphone weakness, the electric vehicle division posted a 17.1% revenue increase to USD 3.7 billion, though it still ran an operating loss of USD 385 million. Management responded by raising its full-year EV delivery target to 550,000 vehicles — a clear signal that the company intends to push forward in the segment despite the red ink.

Late July brought additional EV news: the announcement of two new family-oriented SUVs, the N90 and N70. The same day, Chinese memory-chip maker CXMT debuted on the Shanghai stock exchange with shares surging 466% above their offer price. Xiaomi holds an undisclosed minority stake in CXMT, which lifted the book value of that position without injecting fresh capital into the company.

A Deeper Supply-Chain Play

The CXMT relationship extends well beyond the foldable launch. The memory maker has begun mass production of LPDDR6 less than twelve months after introducing its predecessor standard, positioning itself ahead of South Korean rivals in the race to ship the new generation. Xiaomi's stake in the company, combined with the early adoption of its chips, is part of a broader strategy to reduce dependence on Western suppliers — the company says it has poured more than 20 billion yuan into chip development and built a team of over 3,000 engineers.

There's a geopolitical layer to the partnership as well. The U.S. Department of Defense designated CXMT as a Chinese military company in January 2025, a classification the memory maker is contesting in court. Meanwhile, Apple is reportedly seeking U.S. approval to source CXMT chips for its own iPhones and MacBooks — a sign of how central the Chinese supplier has become to the global industry.

What's Coming This Autumn

The 18 Fold won't be alone in September. The Xiaomi Pad 9 Pro Max, also powered by the Xring O3, is slated to arrive with a 13-inch display, a battery exceeding 10,000 milliampere-hours, and 120-watt fast charging. The Redmi 17 5G launches in India on September 3 with a 7,900-milliampere-hour battery and a Snapdragon 4 Gen 5 chip. A HyperOS test build is also trialing a privacy feature designed to block side-angle viewing of apps and notifications — possibly destined for the Xiaomi 18 series.

The Buyback Cushion

Xiaomi has also been leaning on capital returns to steady the stock. In May, alongside its Q1 results, the company authorized a new share buyback program of 20 billion Hong Kong dollars over the following twelve months, on top of 8.4 billion Hong Kong dollars in repurchases executed since the start of 2026. Such programs can provide a floor during periods of weak operating numbers, though they don't substitute for sustained earnings growth.

The Memory-Price Question

Media reports suggest Xiaomi has quietly raised its internal smartphone shipment target for the year from 90 million to 110 million units, citing an expected stabilization in memory-chip prices for DRAM and NAND. The company hasn't officially confirmed the revision. For investors, the central question remains whether the higher-margin IoT and EV businesses can eventually offset the profit erosion in smartphones — and whether a foldable with homegrown memory can help reverse the volume decline that started the slide.