Xiaomi's Two-Front Battle: Record EV Deliveries Meet a Memory-Chip Margin Squeeze
Published on 08/20/2026 at 02:51 | Redaktion boerse-global.de
The week's news flow out of Xiaomi has been relentless: a quarterly earnings report, a humanoid robot unveiling, a new operating system with an AI assistant, and confirmation that the SU7 sedan has blown past a half-million cumulative deliveries. For investors, though, the question isn't whether the company is growing — it's whether that growth can generate enough profit to justify the stock's valuation after a bruising year.
A Mixed Quarter Beneath the Headlines
The numbers from the second quarter of 2026 tell a story of two halves. Group revenue reached RMB 108.9 billion, up 9.9 percent quarter-on-quarter, while adjusted net profit edged up 2.4 percent sequentially to RMB 6.2 billion. But the year-on-year picture is far less flattering: revenue slipped 6.1 percent and adjusted profit tumbled 42.6 percent, missing the market's RMB 6.6 billion consensus. The culprit is a familiar one — memory chip prices have surged beyond the company's own expectations, squeezing margins across its core smartphone operation.
The market's initial reaction was nonetheless enthusiastic. Shares jumped 8.1 percent on Wednesday to close at EUR 3.03, following a Goldman Sachs upgrade that lifted the bank's gross margin estimates for the smartphone business through 2028 and predicted the margin trough would arrive in the third quarter of 2026. The stock had closed the prior session at EUR 2.80.
That short-term pop, however, sits atop a fragile longer-term chart. The shares remain down 1.9 percent on the month, roughly 30 percent below their start-of-year level, and a staggering 54 percent beneath the 52-week high set on September 25, 2025. With the stock trading 16 percent below its 200-day moving average and annualized volatility running at 60 percent, this remains a high-octane holding where sharp rallies can be swiftly unwound.
The Smartphone Squeeze
The core business is feeling the pain acutely. Smartphone × AIoT revenue contracted 11.3 percent year-on-year to RMB 84 billion, with pure smartphone sales down 7.5 percent to RMB 42.1 billion. Shipments fell 26 percent to 31.2 million units — a decline that mirrors a broader industry slump, as global smartphone deliveries dropped 6 percent amid the memory price spike.
Should investors sell immediately? Or is it worth buying Xiaomi?
Yet there's a strategic shift underway that offers some compensation. The average selling price per smartphone climbed 25.9 percent year-on-year to a record RMB 1,351, with devices priced above RMB 3,000 accounting for 32.1 percent of China sales — up 4.5 percentage points and another all-time high. In the RMB 3,000–4,000 bracket, Xiaomi's market share reached 16.2 percent. The company retains its global number-three position in shipments, a ranking it has now held for 24 consecutive quarters.
On the earnings call, Lu Weibing acknowledged that the memory price escalation had exceeded internal forecasts — a headwind that isn't Xiaomi's alone but is hitting the entire industry.
EVs: Scaling Fast, Still Bleeding
The bright spot remains the "Smart EV and New Initiatives" segment, which grew 17.1 percent to RMB 24.9 billion in the quarter, with the pure automotive business contributing RMB 23.9 billion. The SU7 reached 500,000 cumulative deliveries on Monday, roughly 28.5 months after the first handover — a pace that speaks to the company's manufacturing ramp capability. Quarterly EV deliveries hit 104,199 units, up 28.2 percent year-on-year, and management has lifted its full-year 2026 target to 550,000 vehicles.
The catch: the EV segment still posted an operating loss of RMB 2.6 billion. R&D spending climbed 19 percent to RMB 9.2 billion, with capital expenditures reaching RMB 3.6 billion — evidence that Xiaomi is doubling down on future bets even as the core business absorbs margin pressure.
A potential wildcard is swirling in the background: Handelsblatt reports that Stellantis is in talks with both Xiaomi and Xpeng about possible partnerships, potentially including equity stakes. Nothing has been confirmed.
Two Scenarios, One September Deadline
The bull case rests on the EV division's trajectory. The SkyNomad series — headlined by the N90 Max flagship SUV and N70 Max — is slated for a September launch, while the YU7 GT sport SUV's Nürburgring lap time of 7:22.755 minutes has burnished the brand's credentials. Analyst Ming Lu issued a bullish note on Wednesday with a target of HKD 81, implying roughly 100 percent upside. The company's buyback program adds another layer of conviction: through mid-August, Xiaomi had repurchased 377.5 million shares for HKD 11.7 billion this year, signaling management's view that the equity is undervalued.
The bear case is equally coherent. The same analyst service that carried Ming Lu's target also quoted Henry Soediarko, who cautioned on heavy capital spending and margin erosion from rising storage chip prices. If DRAM costs keep climbing while the smartphone division absorbs the blow and the EV business continues to burn cash, adjusted profit could stay under pressure despite record revenues.
The September SkyNomad launch is shaping up as the pivotal test. Real order and delivery numbers from the new SUVs will determine whether the EV business can genuinely become the profit pillar Xiaomi needs it to be — or whether the recent share price bounce proves to be just another head-fake in a volatile, trendless market.
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