Xiaomi's Bold Bet on Budget Phones: Can 110 Million Units Overcome a Memory-Chip Hangover?
Published on 07/23/2026 at 13:32 | Redaktion boerse-global.de
Xiaomi is placing an audacious wager on the smartphone market. Despite a punishing first quarter that saw profits nearly halve and shipments tumble, the Chinese electronics giant has raised its full-year delivery target to 110 million devices, up from an earlier estimate of roughly 90 million. The move comes as the industry grapples with soaring memory-chip costs that have already forced Apple and Microsoft to raise prices — and that squeezed Xiaomi’s own margins to the breaking point.
The decision marks a sharp strategic pivot. Xiaomi had already lowered its internal forecasts twice this year as the price of DRAM and NAND components surged. According to president Lu Weibing, a standard package of 12GB of RAM and 512GB of storage now costs the company around 1,500 yuan more than it did in 2025. That cost explosion drove a 19.2 percent drop in first-quarter smartphone shipments to 33.8 million units, while gross margin in the core handset business shrank from 12.4 percent to 10.1 percent.
The bulk of the additional 20 million units in the revised target will target the entry-level and budget segments — precisely the price bands that suffered most from expensive memory components. Xiaomi appears to be betting that the chip-cost spiral is about to cool faster than most analysts anticipate. There are early signs of pushback from other manufacturers: OPPO and vivo have rejected Samsung’s latest quarterly pricing for memory chips, a development that could accelerate a normalization of component costs.
The financial damage from the first quarter was severe. Revenue fell 10.9 percent year on year to 99.14 billion yuan, while adjusted net income plunged 43.1 percent to 6.07 billion yuan. The average selling price of a Xiaomi smartphone did reach a record 1,310 yuan, supported by growing penetration in the premium segment above 3,000 yuan, but that was cold comfort as volume collapsed.
Should investors sell immediately? Or is it worth buying Xiaomi?
Xiaomi’s electric-vehicle division offered a rare bright spot. Revenue from EVs rose 6.9 percent to nearly 19.9 billion yuan, with 80,856 vehicles delivered. The SU7 model led sales in the electric sedan segment above 200,000 yuan, while the YU7 GT set a new SUV lap record at the Nürburgring Nordschleife. Yet the auto business remains deeply unprofitable, posting a segment loss of 3.1 billion yuan as Xiaomi continues to subsidize its push into the EV market.
Management is fighting on multiple fronts. A share buyback program worth 20 billion Hong Kong dollars launched on June 2, with more than 8.4 billion Hong Kong dollars already spent. Research and development spending jumped 33.4 percent to 9.0 billion yuan, with at least 16 billion yuan earmarked for artificial intelligence in 2026 and more than 60 billion yuan planned over three years. Xiaomi’s open-source language model MiMo-V2.5-Pro now tops open-source rankings, and the company slashed API access prices by 99 percent. A cash pile exceeding 220 billion yuan provides a buffer for these investments.
The stock market has yet to embrace the turnaround narrative. The shares closed at 2.99 euros on Wednesday, down 3.21 percent on the day, though they have recovered 19.35 percent over the past 30 days to trade at 3.04 euros. That still leaves them 19.58 percent below the 200-day moving average, and the year-to-date loss stands at 31.04 percent. Volatility remains elevated at 45.63 percent on a 30-day basis, suggesting the recent bounce is more a stabilization than a sustainable reversal.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
Whether Xiaomi can hit its ambitious 110-million-unit target hinges on the pace of memory-price normalization. If more handset makers follow OPPO and vivo in pushing back against chip suppliers, the cost relief could come sooner than expected. For now, the combination of an aggressive volume bet and a stock still trapped in a broader downtrend leaves investors watching for the next quarterly results to see if the gamble pays off.
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