Xiaomi's September Offensive: Can a Foldable Flagship and Three EVs Outrun a 26% Shipment Slide?

Xiaomi unveils foldable phone and EVs on Sept 7 amid 26% shipment drop and 42.6% profit decline, betting on in-house chip to revive margins.

The timing reads like a deliberate provocation. Two days before Apple is expected to unveil its own folding iPhone, Xiaomi will take the stage in Beijing on September 7 with the Xiaomi 18 Fold, a new tablet, and three electric vehicles from its Pengcheng lineup. The message is clear: Xiaomi sees itself as a peer, not a follower. But the quarterly numbers behind that swagger tell a more complicated story — one of a company racing forward technologically while its core smartphone engine sputters.

The Core Business Is Coughing

Xiaomi's second-quarter results paint a picture of strain beneath the surface. Revenue in the Smartphone × AIoT segment contracted 11.3% to 84 billion yuan, while pure handset revenue slipped 7.5% to 42.1 billion yuan. The unit numbers sting even harder: shipments collapsed 26% to 31.2 million devices. Adjusted net profit tumbled 42.6% to 6.22 billion yuan, falling well short of the 6.6 billion yuan consensus estimate.

The broader Chinese market offers little cover. IDC data shows domestic smartphone shipments dropped 4.3% in the second quarter to 66 million units — a weak backdrop for any launch, no matter how polished.

A Chip Designed to Answer the Margin Question

Into that gap steps the Xring-O3, Xiaomi's in-house silicon unveiled in late August and manufactured by TSMC on a 3-nanometer process, according to Reuters. The chip powers a 10-core processor clocked at 4.35 GHz inside the Xiaomi 18 Fold, alongside a 16-core GPU promising 85% more graphics performance at 64% lower power consumption. The device also packs a Leica triple-camera system with a fast primary lens and 3.5x optical zoom, wrapped in a chassis featuring new "Dragon Bone" hinge technology.

Benchmark results cited by Geekbench suggest the Xring-O3 delivers a multi-core improvement of roughly 65% over its predecessor, the Xring O1. That kind of vertical integration is precisely what Xiaomi needs to defend margins in an era of soaring component costs — memory prices alone jumped more than 80% in the second quarter, according to Counterpoint analysts, prompting Xiaomi, Huawei, and Honor to raise smartphone prices by up to 1,000 yuan starting September 1.

The engineering is impressive. But chips and hinges don't sell themselves when global demand for premium smartphones is stuttering and your own shipment numbers are shrinking by double digits. The real question for investors isn't whether Xiaomi can match its rivals technologically — that's no longer in doubt — but whether a foldable flagship can actually reverse the slide in both margins and volumes, or whether it becomes another prestige project in a structurally difficult market.

The Second Bet: Electric Vehicles

While the handset division struggles, the EV business tells a different story. Second-quarter revenue climbed 17.1% to $3.7 billion, with $3.5 billion coming from pure EV sales. Yet an operating loss of $385 million underscores how deeply Xiaomi is still investing before this segment turns profitable.

August deliveries surpassed 30,000 vehicles, against a full-year target of 550,000 units. The company is doubling down with three new Pengcheng models — the N70 Pro, N70 Max, and N90 Max — launching alongside the foldable phone. A fourth vehicle, the YU7 GT with roughly 990 horsepower, targets the high-performance segment and could lift average revenue per vehicle.

The competitive landscape, however, keeps sharpening. Waymo is planning robotaxi tests in Munich, while Momenta already holds a nationwide Level-4 license in China and partners with Uber. Auto expert Dudenhöffer sees Xiaomi as a future challenger to established manufacturers like BMW — which cuts both ways, underscoring just how capital-intensive and margin-sensitive this business remains.

What the Market Makes of It All

The stock has drifted up about 2.6% since the product offensive kicked off last Monday, helped by a broader China-tech rally that media reports trace back to Alibaba. At €3.11, the shares sit above their 50-day average of €2.95 but remain well below the 200-day average of €3.54 — a sign the overarching downtrend from last September's record high of €6.54 hasn't broken. The year-to-date loss stands at 28%.

Bernstein analysts lowered their price target on Tuesday from HK$43 to HK$38 but maintained an "Outperform" rating. The firm values Xiaomi at 16 times expected 2027 earnings — well under the historical average of 25 — a discount that essentially bets on whether Xiaomi can offset higher component costs through price increases and a richer product mix. The stock's annualized volatility of 57% and its 54% gap below the 52-week high reflect how fragile investor confidence remains.

The bear case is equally concrete. Reports indicate Xiaomi, Oppo, and Vivo have cut their delivery targets for the year by up to 30%, citing rising costs and component shortages. That suggests the September 1 price hikes may not fully absorb the cost burden — Xiaomi could instead sacrifice sales volume. If customers defect to cheaper rivals like Honor or Nubia, or if EV price pressure intensifies amid new robotaxi competition, Bernstein's target cut could prove to be just the first in a series of adjustments.

A parallel automated share buyback program of up to HK$2.5 billion, running until the 2026 annual general meeting, signals management believes the stock is undervalued despite the weak core numbers.

The next concrete test comes September 7, when the market sees whether the foldable debut and the Sky Nomad EV lineup generate genuine demand — and whether Apple's own folding iPhone, arriving two days later, steals the spotlight. The margin question, not the product specs, will ultimately decide whether Xiaomi's current valuation gap closes or cements itself further.