Xiaomi’s 17T Launch Overshadowed by a Memory Cost Earthquake and Plummeting Margins
29.06.2026 - 03:15:01 | boerse-global.de
Xiaomi’s stock is in freefall. At €2.46 a share, the equity has shed more than 45% since January and sits 63% below its 52-week high of €6.69. The relative strength index has plunged to 19.8, deep in oversold territory, and the stock now trades more than 22% beneath its 50-day moving average. Investors are panicking.
The immediate catalyst for Tuesday’s product event — the unveiling of the 17T smartphone — might offer a brief trading bounce, but the fundamental pressures bearing down on the company are anything but transitory. Two simultaneous crises are eroding profits: a historic spike in memory chip costs and a cash?furnace electric?vehicle division.
Memory prices have quintupled since the third quarter of 2025, according to Xiaomi president Lu Weibing. For TV?display flash storage the increase is tenfold. The root cause lies in a strategic shift at Samsung, SK Hynix and Micron, which collectively control more than 90% of the global DRAM supply. All three have redirected capacity toward high?bandwidth memory used in artificial?intelligence chips, squeezing the standard memory that Xiaomi and other mid?range smartphone makers depend on. Counterpoint Research expects the shortage to persist until at least the end of 2027, and Xiaomi’s own management sees cost pressure lingering into 2028.
The impact shows up starkly in the first?quarter numbers. Revenue slid 10.9% year?on?year to 99.1 billion yuan — the first annual decline in almost three years. The adjusted net profit tumbled 43.1% to 6.07 billion yuan, well below the 6.4 billion yuan analysts had penciled in. The smartphone gross margin shrank from 12.4% to 10.1%, squeezed by higher component procurement costs.
Should investors sell immediately? Or is it worth buying Xiaomi?
Unlike Apple and Samsung, which can pass rising expenses on to premium customers, Xiaomi operates almost entirely in the thin?margin middle class of handsets. The average selling price did climb to a record 1,310 yuan, driven by a deliberate culling of low?profit models and price increases of roughly 200 yuan on three existing devices. Oppo, OnePlus and Honor had already taken similar steps in March. But the portfolio shift has not yet reversed the margin damage.
Compounding the smartphone headwind is Xiaomi’s electric?vehicle adventure. The car division posted an operating loss of 3.1 billion yuan in the first quarter, equivalent to roughly $5,600 lost on every vehicle built. To broaden its customer base and reduce unit losses, the company is preparing a lower?cost SUV under the sub?brand “Skynomad.” Meanwhile, despite the financial strain, Xiaomi has confirmed it will exhibit at this year’s IFA in Berlin, underlining the importance of the European market even as rivals such as Samsung skip the event.
Analyst sentiment is fractured. Goldman Sachs retains a buy rating with a HK$40 target, though it has slashed its full?year profit estimate by 12% to 32.8 billion yuan and forecasts a 50% drop in second?quarter adjusted net income to 5.4 billion yuan. Jefferies, by contrast, downgraded the stock to “underperform” with a target of HK$25.49, a starkly bearish bet on Xiaomi’s ability to weather the cost storm.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
The company is fighting back with a massive ramp?up in research spending. R&D outlays rose 33.4% year?on?year to 9.0 billion yuan in the first quarter. Over the next three years Xiaomi plans to invest 60 billion renminbi in artificial intelligence, with around 16 billion renminbi earmarked for 2026 alone. Teaser videos ahead of the 17T launch have also showcased robotic?arm advances linked to the CyberOne humanoid project, signaling that management remains committed to long?term bets even as the core business bleeds.
The next critical test comes on 26 August 2026, when Xiaomi reports second?quarter results. If the product?mix shift and price increases have begun to stabilize gross margins, the stock may find a floor. If the memory crisis continues to deepen and EV losses widen, the current oversold reading could prove to be just a pause before another leg down. For now, the only certainty is that Xiaomi’s dreams of robotics dominance and automotive scale are costing far more than its core smartphone business can comfortably afford.
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