Xiaomi's Twin Bets: Silicon Independence and an EV Brand That's Already Beating Expectations
Published on 08/28/2026 at 22:31 | Editorial boerse-global.de
There's a moment in the lifecycle of nearly every major electronics group when the question becomes unavoidable: why keep buying someone else's processors when you could design your own? Apple took that leap. Samsung does it in part. Huawei had it forced upon it. Xiaomi, it seems, has now decided the time has come to join that club — though it is hedging its bets with a characteristically cautious rollout.
The company unveiled its new Xring O3 smartphone processor on Monday, manufactured by TSMC using 3-nanometer process technology. The chip, a successor to the Xring O1, is slated to power an upcoming flagship foldable device — the Xiaomi 18 Fold, due in September 2026 — with production volumes estimated at a deliberately modest 200,000 to 300,000 units. That is not mass-market economics; it reads as a controlled experiment, a way of testing in-house silicon without betting the entire smartphone franchise on it.
The Margin Squeeze That Made This Necessary
The strategic logic is not hard to trace. Xiaomi has just lived through a painful demonstration of how vulnerable its cost base can be to forces entirely outside its control. In the second quarter of 2026, adjusted net profit collapsed by 42.6 percent to 6.22 billion yuan, missing the analyst consensus of 6.6 billion yuan, largely due to sharply higher memory-chip prices in its smartphone division. When a chunk of your value chain is hostage to commodity pricing, owning at least part of it starts to look less like vanity and more like self-defense.
The market, notably, has not punished the company for the earnings miss. Since the results were published roughly two weeks ago, the shares have climbed around 10 percent. Revenue growth of 9.9 percent quarter-on-quarter suggested stabilization, and investors appear willing to look past the profit squeeze toward the longer-term story.
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That story now has two distinct threads, and both are capital-intensive. On the automotive side, Xiaomi delivered 104,199 vehicles in the second quarter, up 28.2 percent year-on-year, though the EV division still posted an operating loss of 2.6 billion yuan. Management nonetheless raised its full-year delivery target to 550,000 vehicles — a clear signal that it is prepared to trade short-term profitability for long-term market share.
SkyNomad's Surprise Momentum
The EV bet received a fresh jolt of validation on Friday, when the company launched a global web portal for Xiaomi Auto and reports surfaced that its new electric SUV sub-brand, SkyNomad, had racked up more than 100,000 pre-orders within a week. The shares responded with a 2.4 percent gain to 3.06 euros, and the news did more for investor sentiment than any quarterly report could have.
The portal is, on its face, little more than a marketing tool ahead of a European expansion. But the pre-order numbers suggest something more substantive: demand for Xiaomi's vehicles may extend well beyond the domestic Chinese market. Whether the company can convert that early enthusiasm into profitable operations in Europe remains an open question, but the early signals are encouraging.
Vice President Xu Fei offered an interesting glimpse into the company's thinking on chips, telling media that Xiaomi deliberately does not intend to match Apple's annual release cycle for high-end processors, preferring instead to optimize development efficiency. That is a conscious rejection of competitive pressure — a sign of strategic maturity rather than haste.
A Premium Pivot in Progress
The broader picture is of a company methodically repositioning itself. Average selling prices in the smartphone segment hit a record 188 US dollars in the second quarter, up 26 percent, as Xiaomi pushes further into premium territory. Meanwhile, the company has committed 29 billion US dollars to research and development through 2030, with a focus on its MiMo line of AI models and the vertical integration of its "Human x Car x Home" ecosystem.
The share buyback program continues in the background — unspectacular but steady. On Monday, Xiaomi repurchased shares worth 50.78 million Hong Kong dollars, bringing the cumulative total for the year to 11.77 billion Hong Kong dollars. It is a signal to shareholders that management believes in its own paper, operational headaches notwithstanding.
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The stock currently trades at 3.07 euros, up 2.6 percent on the day. That remains 53 percent below the 52-week high of 6.54 euros reached last September, and 29 percent down year-to-date, though the shares have now reclaimed their 50-day moving average of 2.92 euros. Nomura, which reiterated its "Neutral" rating on August 21, attributed the revenue beat primarily to higher average smartphone prices and stronger IoT sales — evidence that the core business still carries the weight of the company's ambitions.
The question hanging over Xiaomi is not whether it can navigate the next quarter, but whether it can sustain two capital-intensive bets simultaneously without exhausting itself. The EV division must rein in its startup losses in the foreseeable future; otherwise, even the most impressive chip progress risks being dismissed as cosmetic. For now, the market seems willing to give the company the benefit of the doubt — but the margin for error is narrowing with every new investment.
