Xiaomi's Memory-Chip Squeeze Puts a Hard Cap on Its EV Momentum

Xiaomi faces dual pressures: smartphone market share drops amid rising chip costs, while EV growth fails to offset cash burn, sending shares down 50% from peak.

The arithmetic is getting uncomfortable for Xiaomi investors. A stock that has clawed back nearly 31 percent over the past month still sits more than 50 percent below its September peak, and the forces keeping it there are not going away quietly. The company is now fighting a two-front war: a smartphone business bleeding market share under the weight of surging memory-chip costs, and an electric-vehicle division that is growing steadily but burning cash at a pace that has yet to convince the market.

The latest flashpoint came on Friday, when the shares closed at EUR 3.23, down 5.00 percent on the day. The sell-off arrived just two days after Xiaomi unveiled its SkyNomad N70 Max and N90 Max hybrid SUVs — models with range-extender technology that mark the company's first serious push into the hybrid segment. Investors responded not with a rally but with profit-taking, a telling sign that product news alone will no longer move the needle.

A Third Price Hike in Twelve Months

The smartphone side of the business is where the pressure is most acute. Xiaomi has now raised prices on its Chinese flagship lineup three times this year, with the latest round taking effect immediately. The Xiaomi 17 moves from 4,499 to 4,799 yuan, the Xiaomi 17 Pro climbs to 5,399 yuan, and the top-tier 17 Pro Max now retails at 6,499 yuan, up from 5,999. The budget-oriented Redmi Turbo 5 and K90 models each carry increases of roughly 300 yuan. Only the Xiaomi 17 Ultra holds steady at 6,999 yuan.

President Lu Weibing attributes the escalation to memory-chip costs that he says have nearly quadrupled, describing the current environment as the toughest the mobile industry has faced in a decade. He has not ruled out flagship prices crossing the 10,000-yuan threshold before year-end. Further increases of 200 to 800 yuan in the second half are widely expected, with the company acknowledging it can only partially cushion the blow for consumers.

Xiaomi is far from alone in this bind. OPPO, OnePlus, vivo, and Honor have all pushed through price increases in recent days. IDC data for the second quarter of 2026 shows Chinese smartphone shipments contracting 4.3 percent to 66.01 million units — and Xiaomi absorbing the worst of it. The company's deliveries fell 21.7 percent, the steepest decline among the country's five largest vendors.

The First-Quarter Scorecard

The damage is already visible in the numbers. First-quarter 2026 revenue dropped 10.9 percent to roughly 99.1 billion yuan, while adjusted net income tumbled 43.1 percent to 6.07 billion yuan. The smartphone division saw revenue fall 12.5 percent to 44.3 billion yuan on a 19.2 percent decline in unit sales to 33.8 million devices. Average selling prices, however, climbed 8.2 percent to a record 1,310 yuan — a double-edged result that reflects the pricing power Xiaomi retains even as volumes shrink.

The EV segment offered a counterweight. Revenue rose 5.1 percent to 19.0 billion yuan, with deliveries up 6.6 percent to 80,856 vehicles. Over the full year 2025, the auto business posted a 221.8 percent revenue surge and was the primary driver behind the group's 25 percent overall revenue growth to roughly 457 billion yuan, with annual profit up 76.3 percent. Founder Lei Jun has also pledged 60 billion yuan in artificial-intelligence investment over the next three years, a clear signal of where strategic priorities are heading. A share buyback program of 20 billion Hong Kong dollars, launched in June, is scheduled to run for a year.

The Technical Picture

Chartists have a clear line in the sand: the 200-day moving average at EUR 3.73. The current price sits 13.27 percent below that level, and the stock's ability to reclaim it will determine whether the recent bounce is a genuine reversal or a dead-cat rally. The 50-day average at EUR 2.92 provides a cushion of roughly ten percent, and the relative strength index at 57.7 suggests the stock is not yet overbought despite the recent gains.

The 30-day realized volatility of 57.44 percent is a reminder of how quickly sentiment can shift. Analysts expect the stock to trade between the 50-day and 100-day averages — EUR 2.92 and EUR 3.21 respectively — in the coming week, with a retest of the 200-day line possible if support at EUR 2.92 holds.

What August Will Tell Us

Two dates matter now. The first is August 18, when the board reviews the consolidated interim results for the first half. Market speculation centers on whether Xiaomi might declare an interim dividend and, more critically, how much the EV division's ramp-up costs will weigh on the balance sheet. The second is August 26, when second-quarter results are due. Consensus expectations point to revenue between 12 and 13 billion dollars, smartphone shipments of 40 to 45 million units, and net income of roughly 520 million dollars — a decline of about 8 percent year on year. Analysts also project gross margin to compress from 18.3 percent to between 16.5 and 17 percent, a direct measure of how deeply the memory-chip crisis has cut into profitability.

The EV business remains a structural drag. Estimates suggest it burned through 1.5 to 2 billion dollars in 2025 and is unlikely to reach meaningful profitability before 2027. July's delivery figures — a fourth consecutive month above 30,000 vehicles — show the production chain is stable, a feat many Chinese EV newcomers have yet to match. But stable output does not equal profit, and the market knows it.

The long-term trend remains downward until the 200-day line is decisively breached. For now, Xiaomi is a stock for investors willing to wait for the interim numbers to clarify whether the SUV push can offset a smartphone slump that shows no signs of easing.