Xiaomi Unveils HK$20 Billion Buyback as Memory Crisis and State Price Probe Squeeze Margins
Published on 07/03/2026 at 11:23 | Redaktion boerse-global.de
Chinese regulators have stepped into Xiaomiâs pricing playbook. In the first week of July, the National Development and Reform Commission (NDRC) dispatched its price-monitoring centre to scrutinise tariffs on the companyâs electric vehicles and smartphones. The timing could hardly be worse. Beijing wants to keep consumer goods affordable, yet the cost of critical components is spiralling out of control.
âMemflationâ is the term analysts are using to describe the explosion in memory-chip prices. The insatiable demand for AI data-centre storage is sucking up global DRAM and NAND production capacity. Gartner forecasts DRAM prices will surge 125% by the end of 2026, while NAND flash could jump 234%. A separate report from the Commercial Times warns that AI alone may consume nearly 20% of worldwide DRAM capacity next year. Gartner analyst Rajeev Rajput sees no meaningful relief before late 2027.
The arithmetic is brutal for Xiaomiâs core handset business. The company has slashed its 2026 smartphone sales target from 170 million units to around 95 million â a cut of roughly 44%. Management now expects a 31% drop in entry-level sales, and president Lu Weibing has not ruled out flagship models breaching the âŹ1,280 mark. Gartner estimates that smartphone prices will rise 13% on average, and the sub-$500 segment could vanish entirely by 2028.
Should investors sell immediately? Or is it worth buying Xiaomi?
Against this backdrop, Xiaomiâs board authorised a fresh buyback of up to HK$20 billion in B-shares over the next twelve months. The programme, valid until the 2027 annual general meeting, follows an earlier round that retired around 399.6 million shares for about HK$14.6 billion. The move came after the stock hit a multi-year low on 1 July, and the announcement briefly lifted the share price by 4.44% on Thursday in Hong Kong.
The rally, however, masks deep technical damage. The stock closed at âŹ2.58 on Thursday, down 42.54% year-to-date and 58.94% over the past twelve months. From its 52-week high of âŹ6.51 reached last September, the equity has fallen 60.36%. The relative strength index of 34.1 suggests the shares are approaching oversold territory â a level that historically has sparked technical bounces. Indeed, the stock has already recovered 10.21% from its 26 June trough of âŹ2.34.
Xiaomiâs electric-vehicle division offers a rare bright spot. Deliveries topped 30,000 units for a third consecutive month in June, bringing the first-half tally to an estimated 180,000 vehicles. The full-year target of 550,000 remains steep, requiring monthly deliveries to average nearly 62,000 in the second half â more than double the current pace.
The buyback may provide a short-term floor, but the real test lies in how Xiaomi navigates the memory-cost storm while keeping Beijingâs price watchdogs at bay. Passing on higher component costs to consumers risks alienating the very market the NDRC is trying to protect, yet absorbing them would crush margins. For investors, the gap between a technical rebound and a sustained recovery depends on that delicate balancing act.
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