Regulator Scrutiny Joins Memory-Chip Crisis to Strain Xiaomi's Fragile Recovery
Published on 07/05/2026 at 11:25 | Redaktion boerse-global.de
Xiaomi’s stock has clawed back roughly 13% from its 52-week trough, but the recovery is under assault from two directions at once. China’s price watchdog has paid the company an unscheduled visit, while a structural surge in memory-chip costs continues to erode margins. The dual headwind leaves the group’s recent buyback programme looking like a shield that may not be big enough to stop the bleeding.
Friday’s close of €2.65 gave Xiaomi a 3.31% daily gain and a 7.77% weekly advance. Yet that leaves the shares down almost 41% year-to-date and nearly 58% over the past twelve months. The 52-week low of €2.34, touched on 26 June, is a reminder of how quickly sentiment can turn. The record high of €6.51 from September 2025 now seems distant.
The new source of pressure comes from the National Development and Reform Commission. Liu Gang, deputy director of the price supervision centre, led a team to Xiaomi to examine pricing in smartphones and electric vehicles. The discussions covered cost pressures, competitive dynamics, and proposals for an orderly industry pricing policy. Xiaomi president Lu Weibing had earlier described the smartphone market as going through its toughest moment in nearly a decade, with component costs spiralling out of control.
Those cost pressures are anything but transient. Lu told investors that contract prices for memory chips used in smartphones have roughly quintupled since the third quarter of 2025, while the increase for television chips is nearly tenfold. Samsung, SK Hynix and Micron have shifted production capacity toward AI data centres, and Counterpoint Research does not expect prices to stabilise before the end of 2027. Chairman Lei Jun has warned the cost pain could persist for two more years.
Should investors sell immediately? Or is it worth buying Xiaomi?
The financial toll is already visible. First-quarter net profit tumbled 57% to 4.72 billion yuan on revenue of 99.14 billion yuan, down 11% year-on-year. Smartphone revenue fell 12.5% to 44.3 billion yuan, while global shipments slumped 19% to 33.8 million units – the steepest decline among the top five handset makers. The segment’s gross margin slipped from 12.4% to 10.1%. The EV business, which briefly turned profitable in the prior-year quarter, has slid back into an operating loss of several billion yuan.
To counter the sell-off, management has launched the largest buyback in company history. The board authorised the repurchase of up to HK$20 billion of Class B shares over the twelve months following the 2026 annual general meeting, replacing an earlier mandate under which it had already bought back roughly 399.6 million Class B shares. The move is framed as a signal of confidence, but actual purchases depend on market conditions and regulatory approval. Meanwhile, short sellers still hold around 9% of the free float, keeping downward pressure alive.
Technically, the stock remains deeply wounded. It trades 13.50% below its 50-day moving average of €3.06 and 33.24% below the 200-day line of €3.97. The RSI has recovered to 40.5, easing from oversold territory but delivering no clear buy signal. The 30-day volatility of 34.72% confirms that wild swings remain the norm.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
Optimists point to Xiaomi’s push up the price ladder. Despite falling unit volumes, the company is steering consumers toward higher-margin models, and its services business continues to contribute structurally profitable revenue. International expansion in Europe and Asia could also provide a cushion if demand there outpaces the price-sensitive home market. A sustained rally back toward the 50-day average of €3.06 would be the first sign that the margin story is gaining credibility.
Pessimists counter that the memory-chip crisis is structural, not cyclical, and that the EV division is bleeding cash again. The next major test will be second-quarter results, due during the third quarter of 2026. Until then, memory-chip price trends and monthly EV delivery figures will decide whether the latest bounce turns into a genuine recovery or fades into yet another technical pause.
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