Xiaomi Slashes Smartphone Targets 30% as Memory Costs Spike, While EV Unit Crosses 600,000 Deliveries
Published on 07/01/2026 at 14:01 | Redaktion boerse-global.de
The diverging fortunes of Xiaomi’s two main businesses have rarely been starker. In the space of a few months, the Chinese tech giant has watched its electric-vehicle arm roar past 600,000 cumulative deliveries since April 2024, while its traditional smartphone division is being forced to cut output targets by as much as 30%. The root of the trouble lies in a global shortage of memory chips, driven by insatiable demand from the artificial-intelligence server market.
Memory chip prices have surged as AI companies vacuum up available supply, and analysts expect further increases of up to 50% in the third quarter. Premium handset makers such as Apple have locked in long-term contracts and been partly insulated. Xiaomi, by contrast, is taking the full brunt. The problem is especially acute in the mid-range and budget segments: roughly 62% of its smartphones sell for under $200, where margins are already razor-thin. The company has struggled to pass on higher component costs to price-sensitive consumers, risking market share and potential delays to new product launches.
Against this headwind, the EV division is providing a bright spot. Xiaomi Auto delivered more than 30,000 vehicles in June for the third consecutive month, bringing the first-half total to over 180,000. That leaves the group roughly one third of the way toward its annual target of 500,000 units. The SU7 sedan and the upcoming YU7 SUV — the latter positioned as a direct rival to Tesla’s Model Y — have been the main drivers. A second factory is being ramped up to support further growth, with new YU7 variants expected in the second half of the year.
Should investors sell immediately? Or is it worth buying Xiaomi?
Management is betting that EVs, combined with a broader ecosystem strategy dubbed “Human × Car × Home,” will eventually compensate for the erosion in smartphones. The company plans to invest €7.4 billion in research and development between 2026 and 2028, with a heavy focus on artificial intelligence. A European expansion is also on the cards: Xiaomi will appear at the IFA trade fair in Berlin this September, marking its first major exhibition presence on the continent.
Investors, however, remain wary. The mixed signals have sent the stock on a downward slide since October 2025. The shares recently traded at around €2.50 in Hong Kong, recovering slightly from a year low of €2.34 hit in late June, but still down more than 44% since the start of 2026. The relative strength index has dropped to about 20, a level that technical analysts describe as heavily oversold. Short sellers have built up positions amounting to roughly 9% of the free float.
Xiaomi has deployed heavy firepower to stem the decline. A buyback program of up to HK$20 billion (about €2.4 billion) began in June, with an independent broker already scooping up shares in Hong Kong as part of a HK$4 billion tranche that runs automatically. So far the purchases have done little to reverse the selling pressure. The decisive question for the second half of the year is whether scale advantages from the EV business can offset the soaring chip costs dragging down the smartphone division. The next quarterly earnings report will show whether the balancing act is working.
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