Memory Cost Squeeze and EV Cash Burn Leave Xiaomi Stock Near 52-Week Low
25.06.2026 - 02:43:46 | boerse-global.de
Xiaomi finds itself trapped between two punishing forces: a memory-chip price explosion driven by AI demand and a cash-guzzling electric-vehicle division that is bleeding more than $5,600 on every car it sells. The Chinese tech giant’s shares have slumped to around €2.56, within striking distance of a 52-week low, and are down roughly 43% since the start of the year. A modest intraday bounce of 2.64% has done little to change the overwhelmingly bearish picture.
The root cause lies in a structural shift in the semiconductor market. Producers like Samsung and Micron have pivoted production toward high-bandwidth memory for AI data centers, starving the smartphone segment of supply. According to Xiaomi president Lu Weibing, contract prices for smartphone memory have quintupled since the end of 2025; for televisions, the increase has been tenfold. That has ripped through the company’s margins. Adjusted net profit plunged by more than 43% in the first quarter, and Goldman Sachs warns of a further decline of up to 50% in the current period. JPMorgan expects memory costs to keep climbing.
The pain is especially acute in Xiaomi’s core handset business, where roughly 62% of devices sell for under $200. Management tried to push through price increases of as much as 30% on select models, but customers balked. Smartphone revenue slid to 44.3 billion yuan, and the segment’s gross margin collapsed to 10.1%. Shipments fell 19% year-on-year to 33.8 million units in the first quarter — the worst performance among the top five smartphone makers, while Apple and Huawei held prices steady and gained market share. Overall revenue dropped almost 11% to 99.1 billion yuan, marking the first year-on-year decline in nearly three years. The pain spread beyond handsets: the connected-home appliances segment slumped roughly 24% as Chinese government subsidies expired.
Should investors sell immediately? Or is it worth buying Xiaomi?
Meanwhile, Xiaomi’s high-profile electric-vehicle business is deepening the financial hole. The EV division generated nearly 20 billion yuan in revenue but recorded an operating loss of 3.1 billion yuan — equivalent to a loss of roughly $5,600 per delivered car. Delivery volumes are also falling short. The company handed over about 150,000 vehicles between January and May, but May shipments slipped 11% from April. To hit the full-year target of 550,000 units, Xiaomi would need a production miracle that few analysts see as plausible.
Management has scrambled to counter the headwinds. A multibillion-dollar share buyback programme launched in early June has so far failed to stem the decline, and short interest has climbed to around 9% of free float. The company is also pouring money into research and development, targeting 40 billion renminbi in R&D spending for the year, with a specific commitment of $8.7 billion earmarked for artificial intelligence over the next three years. That AI push recently produced the MiMo Code coding assistant and a series of large language models, but the pay-off remains distant.
Counterpoint Research expects memory-chip tightness to persist until at least the end of 2027, meaning the cost pressure that is crushing Xiaomi’s margins shows no sign of easing. With its core business under siege and its EV ambitions still bleeding cash, the stock lacks a near-term catalyst for a meaningful recovery.
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