Xiaomi's Ecosystem Push and EV Growth Can't Mask 43% Profit Erosion as Chip Costs Bite
02.06.2026 - 13:11:38 | boerse-global.de
Xiaomi is fighting on multiple fronts. The Chinese tech giant has rolled out a fresh wave of product news—from premium noise-cancelling earbuds to deeper iOS integration—and its board just approved a HK$20 billion share buyback. Yet the stock languishes near its 52-week low of HK$3.08 (EUR 3.08), having shed roughly 27-30% since the start of the year. The disconnect between ambition and reality is stark.
Chip Costs Pulverise Margins
The culprit is a brutal margin squeeze. Xiaomi's adjusted net profit for the first quarter of 2026 tumbled 43% year-on-year to just 6.1 billion yuan (EUR 772 million), despite revenue of 99.1 billion yuan falling short of analyst estimates. The primary driver is a near-doubling in prices of DRAM and NAND memory chips, which directly hits the low-margin budget smartphone segment that accounts for a large chunk of Xiaomi's volume.
The impact on shipments is severe. According to Omdia, Xiaomi's smartphone deliveries dropped 19% to 33.8 million units in Q1—the biggest decline among the world's top five handset makers. Industry watchers see the budget market shrinking by up to 13.9% over full-year 2026, compounding the company's structural headache.
Buyback Signals Confidence, but Chart Tells a Different Story
On the day of its annual general meeting, Xiaomi announced a 12-month buyback programme worth up to HK$20 billion. Management's message is clear: it sees value in the shares. Yet scepticism reigns. At roughly EUR 3.18-3.26, the stock is barely above the EUR 3.08 floor marked in late May. Over the past 12 months, it has lost over 44% of its value.
Should investors sell immediately? Or is it worth buying Xiaomi?
Software and Services: Building Bridges, Not Profits
To offset hardware headwinds, Xiaomi is expanding its software ecosystem. HyperOS 3.1, based on Android 16, is rolling out to some 40 models including the flagship Xiaomi 15, 14 and 13 series. A new feature called "Super Ada" powers live activities, and compatibility with Apple AirPods has been deepened.
More strategically, the Xiaomi 17T Pro—launched on 1 June—now supports Google Quick Share with AirDrop compatibility, allowing direct wireless file transfers between Xiaomi devices and iPhones without cloud services. It is a clear play to retain Apple-tied users. Meanwhile, the IoT platform has surpassed 1.1 billion connected devices (excluding phones and laptops), underscoring the long-term ecosystem bet.
EV Division: Volume Growing, Losses Still Deep
Xiaomi's electric vehicle venture remains a significant drain. The EV segment posted an operating loss of 3.1 billion yuan in Q1, as heavy spending on manufacturing capacity in Beijing and Wuhan continues. On the positive side, deliveries of the SU7 sedan exceeded 30,000 units in May on the Chinese home market, and the company maintains its 2026 target of 550,000 vehicles.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
Time Horizon the Key Question
Analysts are watching to see whether software and services—or the eventual scale-up of EV sales—can offset the chip cost pressure that shows no sign of easing. The buyback provides a floor, but the next catalyst is likely to be the Q2 earnings report. Until memory chip prices soften or the EV unit reaches break-even, Xiaomi's stock may continue to drift in no man's land.
Ad
Xiaomi Stock: New Analysis - 2 June
Fresh Xiaomi information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
