Xiaomi's Memory-Chip Squeeze Meets Its EV Ambitions: A Quarter That Could Define the Year
Published on 08/02/2026 at 05:11 | Redaktion boerse-global.de
The arithmetic facing Xiaomi investors is unforgiving. The stock closed Friday at €3.23, still 50.35 percent below its 52-week high of €6.51, even after a 30-day rally of 30.69 percent that briefly restored some confidence. With second-quarter results due on August 26, the company must convince the market it can navigate a memory-chip price surge that has already eviscerated its margins — while simultaneously funding an aggressive push into electric vehicles.
The first quarter painted a grim picture. Adjusted net income tumbled 43.1 percent to RMB 6.1 billion, while revenue fell 10.9 percent to RMB 99.1 billion, casualties of soaring DRAM and NAND costs. Xiaomi management has been blunt about the severity: executive Lu Weibing described the current memory shortage as the industry's worst in a decade, with prices now running at four times their level from the first quarter of 2025. For a mid-range configuration with 12GB of RAM and 512GB of storage, that translates to roughly RMB 1,500 in additional component costs. Samsung has warned the RAM crunch could persist through 2027 and into 2028, and the ripple effects are already visible across the sector — Apple, Nvidia, and Samsung itself have all adjusted pricing.
Xiaomi has responded by raising prices on its Xiaomi 17 series, Redmi K90 line, and Turbo 5 models in China, with increases ranging from RMB 300 to RMB 500 depending on the variant. The base Xiaomi 17 now retails at RMB 4,799, up from RMB 4,499, while the Pro Max climbed from RMB 5,999 to RMB 6,499. The entry-level Turbo 5 absorbed the steepest proportional hit at roughly 13 percent, while the higher-end K90 Pro Max saw a more modest 7 percent increase. India followed in late July with hikes of 500 to 5,000 rupees across five models, and further industry-wide increases are expected in August from Samsung, OPPO, Realme, and Nothing. A leaked spec sheet for the upcoming Redmi Note 17, slated for an August 6 launch in India, points to a significant price jump over its predecessor.
Against this backdrop, an unconfirmed report that Xiaomi aims to lift its 2026 smartphone delivery target from 90 million to 110 million units — a 22 percent increase — has raised eyebrows. The rationale cited is an anticipated stabilization in memory prices, with focus on budget and mid-range devices in growth markets across Asia and Latin America. The company has not officially confirmed the figure, and the logic of chasing volume while component costs remain elevated appears contradictory on its face. Investors will be watching how management reconciles these two impulses.
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The EV Counterweight
The automotive division offers a more straightforward growth narrative, though it comes with its own margin questions. Xiaomi has opened pre-orders for two range-extender SUVs under its Skynomad sub-brand, built on the Kunlun platform. The N70 Max starts at RMB 259,900, while the seven-seat N90 Max is priced at RMB 299,900. Both claim an electric range of around 500 kilometers, extending to a combined 1,705 kilometers with the gasoline generator. Deliveries are scheduled to begin in September, with a European launch targeted for 2027.
The pricing strategy positions Skynomad aggressively against Li Auto's comparable offerings, a deliberate move to capture market share in China's crowded new-energy vehicle segment. Analyst Chen Jing argues Xiaomi's integration with its smartphone and IoT ecosystem gives it a competitive edge over rivals like BYD, Li Auto, and Zeekr. The company sold 185,055 EVs in the first half of 2026, up 17.2 percent year over year, though the full-year target of 550,000 vehicles remains a stretch.
CEO Lei Jun has dismissed speculation about a US market entry — a YU7 Max spotted in Illinois was likely there for benchmarking purposes — and the company also denied rumors of a Ford joint venture.
What August 26 Will Settle
The bull case rests on a simple premise: memory prices stabilize, the Q2 report confirms the worst is over, and Skynomad's aggressive pricing wins share without destroying margins. The buyback program — roughly 399.6 million Class B shares for about HK$14.6 billion through May — signals management believes the stock is undervalued, and the recent 30-day rally suggests some investors agree.
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The bear case is equally straightforward. If DRAM and NAND costs keep climbing, Q2 will deliver another round of margin compression, and the stock's 5.00 percent drop on Friday shows how quickly sentiment can turn. The annualized volatility of 57.44 percent underscores just how divided the market remains. A price war in EVs could also backfire, winning share at the expense of profitability in a division that has yet to prove it can scale profitably.
Two dates now dominate the near-term calendar: the Skynomad deliveries beginning in September and, more critically, the August 26 earnings report. The gap to the 52-week high — still more than half the stock's value — is a reminder of how much trust has already been lost. Whether the memory-chip headwind is easing or intensifying will determine which side of that divide the market lands on.
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