Xiaomi's Product Blitz Can't Mask a 57% Profit Plunge as Chip Costs and EV Losses Bite

Xiaomi is flooding Europe with new hardware — a flagship smartphone, a robot vacuum, a fridge, even a washer-dryer. Yet the buzz from the launch events in Vienna and Düsseldorf has done little to shield the stock from its worst sell-off in years. While the company rolls out premium devices and expands its smart-home lineup, its latest quarterly numbers reveal a business squeezed from two sides: soaring memory-chip prices and an electric-vehicle division that is still burning cash.

The smartphone offensive kicked off in Vienna over the weekend, where Xiaomi unveiled the 17T series for the European market. The premium 17T Pro packs MediaTek’s Dimensity 9500 processor, a 7,000 mAh battery that reaches full charge in 46 minutes via 100-watt wired charging, and a display capable of 3,500 nits peak brightness with a 144 Hz refresh rate. The Leica-tuned camera system includes a 50-megapixel main sensor and a 5x telephoto lens. Pricing starts at around 780 Swiss francs for the Pro model and about 720 francs for the standard version. The move comes at a time when the broader smartphone market is contracting: IDC expects global shipments to fall 14% in 2026 to roughly 1.09 billion units.

Days earlier, on 28 May, Xiaomi showed off four new smart-home products in Düsseldorf aimed at the entry-to-mid German market. The TV S Mini LED Series 2026 starts at €599 for the 55-inch model and goes up to 98 inches, with QD-Mini-LED technology and a 288 Hz refresh rate. The Robot Vacuum H50 Pro offers 15,000 Pa of suction and an all-in-one station for €499.99. A 621-litre Mijia fridge-freezer is priced at €849, and an 8 kg washer-dryer at €499, which the company claims exceeds EU energy class A by 30%. The TV and vacuum are available immediately, but the large appliances still lack a concrete delivery date. Analysts have flagged a potential service risk because warranty handling runs through partners such as Ingram Micro.

Should investors sell immediately? Or is it worth buying Xiaomi?

All that hardware ambition collides with a grim earnings picture. In the first quarter of 2026, Xiaomi’s net profit plunged 57% to 4.7 billion renminbi. Adjusted profit fell 43% to 6.1 billion renminbi, well below analyst estimates. Revenue dropped 11% to 99.1 billion renminbi. The main culprit: exploding prices for DRAM and NAND flash memory chips, which have roughly doubled in recent quarters on the back of massive demand from AI data centres. CEO Lei Jun has warned that the cost pressure could last up to two more years. The smartphone segment was hit hardest: shipments fell 19% year-on-year to 33.8 million units, the sharpest decline among the world’s top five handset makers, pushing segment margins down to 10.1%.

The management’s response has been to step up share buybacks. One day after the stock touched a 52-week low in Hong Kong, Xiaomi purchased 10.5 million of its own shares in a single session, spending about 298 million Hong Kong dollars. This was the first use of a newly approved buyback programme with a total envelope of 20 billion Hong Kong dollars (roughly 2.55 billion US dollars), which runs for 12 months starting on 2 June 2026. The company had already bought back shares worth 4.7 billion HKD since the start of the year under an earlier automatic programme worth 2.5 billion HKD. But the market has so far shrugged off the signal: in Frankfurt, Xiaomi’s stock sits at €3.08, exactly the 52-week low. It has shed roughly a third of its value since January and nearly 46% over the past twelve months.

The electric-vehicle business — launched with great fanfare in 2024 — remains the biggest drag on profitability. The EV segment delivered 80,856 vehicles in the first quarter, a 6.6% increase, but generated an operating loss of 3.1 billion renminbi on revenue of 19.9 billion renminbi. This reverses the modest annual profit the unit eked out in 2025. Xiaomi is nonetheless pressing ahead: it targets 550,000 EV deliveries this year, 34% more than in 2025. A new and larger electric vehicle on a fresh platform is slated for the second half of 2026. Europe is the next big bet — test drives in France and near Munich suggest preparations for a launch in the second half of 2027, beginning with Germany. Markets with right-hand-drive vehicles, including the UK, Japan, Australia and India, are expected to follow from the first half of 2028.

President William Lu Weibing has described the higher memory-chip costs as a “new normal” while expressing hope for some relief from the third quarter of 2026. The EV division, he argues, is the long-term answer to reducing Xiaomi’s dependence on the cyclical smartphone business. For now, however, the gap between product exuberance and financial reality remains wide. Whether the buyback and the product blitz can restore investor confidence depends on how quickly the chip-cost cycle turns — and whether Europe delivers the volume that China alone has not yet provided.

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