Xiaomi's Twin Pressures: Memory-Chip Inflation and an Unproven SUV Bet

Xiaomi hikes smartphone prices for second time in 2026 due to soaring memory-chip costs, while EV expansion and technical levels shape stock outlook.

Chinese consumers shopping for a new Xiaomi handset are paying more — again. The company pushed through its second price increase of 2026 on August 2, raising the cost of several Redmi and Xiaomi 17-series models in its home market. The move, aimed at shielding gross margins in the smartphone division, comes as memory-chip costs spiral. Xiaomi president Lu Weibing says prices for some components have nearly quadrupled year-on-year, with manufacturers redirecting capacity toward high-bandwidth memory for AI data centers and leaving conventional smartphone chips scarce.

The market's verdict was swift: shares fell 5 percent on Friday to EUR 3.23. Yet that single session masks a more complicated picture. Over the past 30 days, the stock has climbed 22.8 percent, and the relative strength index sits at 57.7 — elevated but not yet in overbought territory. The question now is whether Friday's drop was profit-taking or the opening salvo of a deeper correction.

The Elasticity Test

Xiaomi has spent years cultivating a value-for-money reputation in China. Raising prices risks alienating the very customers who made the brand a household name. If buyers absorb the increases, profitability stabilizes. If they balk, the low-margin entry-level segment takes a hit. That demand elasticity will define the coming months.

The stakes extend beyond smartphones. Xiaomi's automotive ambitions are entering a critical phase, and the company needs a healthy core business to fund them. On July 30, it opened pre-orders for the SkyNomad SUV series — the N70 Max and N90 Max — marking its entry into the extended-range electric vehicle (EREV) segment. Regular sales begin in September, and July deliveries topped 30,000 vehicles, underscoring sustained EV demand.

The SUV push carries its own margin questions. Xiaomi has partnered with Harbin Dongan, a Changan subsidiary, to produce the range-extender motors. External supply of this technology costs roughly USD 1,100 per unit, which should meaningfully cut development expenses and accelerate time-to-market. If cost optimization succeeds, the automotive division could contribute to group results without straining the company's cash reserves of nearly EUR 28 billion.

Two Technical Markers

Chart watchers see a clear battleground. The 200-day moving average at EUR 3.73 remains the decisive hurdle — the stock sits about 13 percent below it. A breakout above that level would signal a sustainable recovery. Closer in, the 100-day average at EUR 3.21 hovers just above the current price; holding it as support would unlock further upside. Below that, the 50-day line at EUR 2.92 marks the line between constructive and bearish. A close beneath it would likely invite selling toward the 52-week low of EUR 2.34.

The bear case is substantial. The stock remains 25.4 percent lower year-to-date and trades more than 50 percent below its 52-week high of EUR 6.51. Annualized volatility of roughly 57 percent reflects how jittery investors remain about Xiaomi's automotive gamble. Competition is intensifying too — BYD delivered over 419,000 vehicles in July alone, extending its dominance.

Analysts expect memory-chip shortages to persist well into 2027, making the cost pressure structural rather than temporary. If the price hikes trigger meaningful volume declines, the smartphone division faces additional strain, and a demand shock could drive shares back toward the yearly low.

Catalysts on the Calendar

August brings near-term catalysts. The POCO M8 Power 5G launches in India on August 4, followed by the Redmi K100 Pro series in China on August 11. Pre-order data for the SkyNomad SUVs will also be scrutinized — strong numbers could provide the momentum needed to reclaim the 100-day average.

The real test arrives in September, when Xiaomi releases official SkyNomad sales figures. Those numbers will reveal whether the EREV strategy delivers or whether the automotive detour drains the balance sheet faster than planned. The first quarter offered a solid foundation — revenue of CNY 99.1 billion and a record average smartphone selling price of CNY 1,310 — but the second half of 2026 will determine whether Xiaomi can navigate both fronts without sacrificing one for the other.