Xiaomi Scraps Its Ultra Flagship as Memory-Chip Inflation Collides With an EV Cash Burn

Xiaomi drops 18 Ultra due to rising memory prices, while EV deliveries lag targets and stock falls 34% YTD. Q2 results due amid cost pressures.

The timing could hardly be more awkward. Xiaomi has shelved its planned "18 Ultra" smartphone — a decision driven by sharply higher DRAM and NAND memory costs — exactly one day before the company is due to publish its second-quarter results. In its place, the "18 Pro Max" will now serve as the top of the lineup, a quiet acknowledgment that the economics of high-end handsets have shifted under the weight of component inflation.

The move underscores a broader tension inside the Chinese tech group. Its smartphone division, still a core earnings driver even as the electric-vehicle business scales, is being squeezed from the cost side. Memory prices have climbed across the industry in recent months, and devices with generous storage configurations — the kind of flagship that typically commands premium pricing — are feeling the margin pressure most acutely.

EV Deliveries Tell a Different Story

The contrast with the automotive arm is stark. Xiaomi's SU7 sedan crossed the 500,000 cumulative-delivery mark back in November, and combined with the YU7 SUV, total deliveries now exceed 760,000 vehicles. The company is also touting more than 100,000 pre-orders for the "Sky Nomad," the successor to the YU7, which hit the market just over three weeks ago.

Yet the market has not rewarded that momentum. Since the Sky Nomad's launch, the stock has shed roughly 15.9 percent — a sign that investors had already priced in high expectations and are now training their attention on the cost side of the EV equation. Engineering partners Lotus Engineering and Prodrive, both British firms, are working on the high-performance SU7 Ultra variant, handling chassis development, aerodynamics and test runs at the Nürburgring — evidence of Xiaomi's ambition to compete technically with established automakers.

The delivery trajectory, however, raises questions. Xiaomi had set a 2026 target of 550,000 vehicle deliveries, but the first half of the year produced only 185,000 units — a pace that falls well short of what would be needed to hit the annual goal. Daiwa Securities reaffirmed its "Buy" rating on August 11, but the Japanese research house expects second-quarter revenue to decline 9 percent to 106 billion yuan, with IoT revenue falling 22 percent to 30 billion yuan, citing the normalization of Chinese subsidy policy and a weak macro environment.

A Stock Deep in the Red

The shares closed Friday at 2.87 euros, up 0.8 percent on the day, but the weekly picture is less flattering: a 7.4 percent decline, and a 34 percent drop since the start of the year. The stock sits roughly 56 percent below its 52-week high of 6.54 euros, reached last September. Market capitalization stands at approximately 72.77 billion euros.

Technically, the stock is hovering just beneath its 50-day moving average of 2.89 euros — a gap of only 0.8 percent — suggesting some stabilization at depressed levels rather than any decisive turnaround.

Buybacks Continue, But the Pressure Builds

Xiaomi has been leaning on its buyback program, a 20 billion Hong Kong dollar initiative launched in May that replaced an earlier program totaling roughly 14.6 billion Hong Kong dollars. Between June 3 and July 15, the company deployed about 100.7 million Hong Kong dollars across 14 tranches to repurchase roughly 79.8 million shares, equivalent to 0.31 percent of its share count. The average entry price tells its own story: around 28.65 Hong Kong dollars initially, but just 25.82 Hong Kong dollars by July 15 — a clear reflection of the persistent decline in Hong Kong trading.

The lock-up period restricting new share issuance ran until August 14, 2026, and has now expired. Xiaomi also made a smaller repurchase in early August, buying 1.862 million Class B shares for about 50 million Hong Kong dollars.

What Tuesday's Numbers Will Reveal

The interim results due Tuesday — when the board also considers whether to declare an interim dividend — will offer the clearest signal yet on how management is balancing the capital-intensive EV push against a deteriorating smartphone picture. The first-quarter figures were already sobering: revenue fell 10.9 percent to 99.142 billion yuan, and GAAP net income plunged 57 percent to 4.72 billion yuan. Smartphone revenue dropped 12.5 percent to 44.273 billion yuan, while the EV and AI-innovation segment posted an operating loss of 3.1 billion yuan.

Whether the 18 Ultra cancellation is a one-off or the opening move in a broader cost-cutting campaign across the handset business remains to be seen. What is already clear is that Xiaomi is navigating a delicate balancing act — defending margins in its legacy business while pouring resources into an automotive venture that has yet to prove it can generate profits at scale. Tuesday's report will show whether the market believes the strategy is working.