Xiaomi's Memory-Chip Squeeze Crushes Profit as German Dealer Deals Offer a Glimmer of Hope

Xiaomi's Q2 2026 adjusted net profit dropped 42.6% to 6.2 billion yuan on DRAM and NAND shortages, while EV deliveries rose 28.2% to 104,199 units.

Xiaomi is paying a steep price for the artificial-intelligence boom. The Chinese technology group's adjusted net profit collapsed 42.6% year-on-year to 6.2 billion yuan in the second quarter of 2026, hammered by a sector-wide shortage of DRAM and NAND memory chips that has driven up component costs across the smartphone industry.

The damage was concentrated in Xiaomi's core business. Global smartphone shipments tumbled 26.5% to 31.2 million units, while total revenue of 108.9 billion yuan represented a 6.1% decline from the prior-year period — even though it marked a 9.9% sequential improvement over the first quarter. Qualcomm added to the pain by raising prices for its Snapdragon processors by a double-digit percentage, a cost that handset makers can only pass on to consumers with a delay.

Price Hikes Roll Out in Japan

Xiaomi has begun responding. In early September, the company lifted prices for several smartphone models in Japan, including the 17T Pro and variants of the Poco X8 Pro. The 17T Pro with 12 gigabytes of RAM now carries a price tag of roughly 879 US dollars, up from around 754 dollars. Xiaomi explicitly cited higher procurement costs for memory and other components as the reason. Industry observers expect the adjustments to spread to other national markets.

The pressure is not Xiaomi's alone. Huawei and Honor have announced similar increases, underscoring how the memory shortage — fueled by the massive buildout of AI data centers — has become an industry-wide problem.

Electric Vehicles Provide the Counterweight

Against that bleak backdrop, Xiaomi's automotive division continues to deliver. The company shipped 104,199 electric vehicles in the second quarter, a 28.2% jump from a year earlier, crossing the 100,000-unit threshold within a single quarter for the first time. Segment revenue climbed to 23.9 billion yuan, up 17.1%. Management responded by raising its full-year 2026 delivery target to 550,000 vehicles.

The model offensive rolls on as well. Xiaomi began selling the 18 Fold — built on its in-house Xring-O3 chipset — about a week ago. The device was unveiled on September 7 in Beijing, and the Chinese market retains exclusivity for now, with no European launch attached.

Eight German Dealer Groups Sign Letters of Intent

Xiaomi used the IFA trade fair in Berlin to signal its European automotive ambitions, though it stopped well short of concrete commitments. The company signed non-binding memoranda of understanding with eight German automotive dealer groups, among them Emil Frey Germany, LUEG Mobility, Hahn Automobile, Dinnebier and Dello.

What the distribution model will actually look like, how many locations will be involved and which sales regions are planned — none of that was disclosed. The planned market entry in Germany remains scheduled for 2027. For investors, the announcement amounts to a statement of intent rather than a reliable roadmap: Europe is being taken seriously, but operational execution is still in its infancy. Anyone hoping for concrete distribution figures or pricing structures for the German market will have to keep waiting.

On the exhibition grounds, Xiaomi displayed its EV lineup, including the SU7 Ultra and SU7 Max, alongside the 18 Fold — the latter visible only behind glass.

Market Reaction Muted

The stock's response reflects the mixed picture. Xiaomi shares closed at EUR 2.90 on Friday, a gain of 2.3% from the previous day, but remain down 4.5% over a seven-trading-day stretch. Since the start of the year, the equity has lost 33%, and it sits 56% below its 52-week high of EUR 6.54 reached last September. At European trading venues today, the paper changed hands at EUR 2.97, a modest intraday advance of 2.4%, though the year-to-date decline stands at 31%.

Management has signaled that peak memory-cost pressure has been reached and expects relief in the second half. Until either the operating business or the Europe plans take tangible shape, any recovery in the share price looks fragile at best.