Xiaomi's Two-Front Battle: Silicon Ambitions Meet an EV Recall
Published on 08/25/2026 at 03:31 | Redaktion boerse-global.de
The numbers are staggering. A 3-nanometer system-on-chip packing 24 billion transistors that scores over 5.2 million points on the AnTuTu benchmark — the first smartphone processor ever to clear that bar. An AI accelerator with 1.22 terabytes per second of bandwidth. A driver-assistance chip capable of running language models with up to 200 billion parameters. Xiaomi unveiled all three this week, and marketing chief Zhu Dan didn't mince words, publicly challenging rivals to benchmark their silicon against his.
Yet the market's response was a shrug. The stock slipped 2.9 percent to €3.07 on Monday, the kind of muted reaction that has become routine for a company whose shares have shed roughly half their value over twelve months and sit about 29 percent below where they started the year.
A Recall Cuts Through the Momentum
That indifference looks more understandable given what happened next. Xiaomi has initiated a recall over the retractable door handles on its SU7 electric sedan, which reportedly may fail to unlock properly during power outages. The shares gave up another 2.6 percent to €3.08, after closing Friday at €3.16.
The timing is awkward. Xiaomi just crossed 500,000 SU7 deliveries — a milestone reached roughly 28.5 months after production began — and the vehicle moved over 21,000 units in July alone. But that volume placed it only fourth in China's sedan sales rankings, trailing the Geely Xingyuan, the Leapmotor A10 and the Tesla Model Y. The pecking order in this segment shifts monthly, and the competitive pressure shows no sign of easing.
Still, context matters. Xiaomi sold more than 80,000 SU7s in China during the first half, while Porsche managed around 6,200 Taycan deliveries in the same period. The gap between the newcomer and established premium players remains stark.
Should investors sell immediately? Or is it worth buying Xiaomi?
The Cost of Playing Two Games at Once
The recall lands just over a week after quarterly results that laid bare the tension in Xiaomi's strategy. Revenue fell 6.1 percent year-on-year to 108.92 billion yuan, while net profit dropped 20.3 percent to 9.46 billion yuan. Heavy investment in AI infrastructure and the EV build-out ate into the bottom line — the price, as the company sees it, of pursuing two capital-intensive growth tracks simultaneously.
Morgan Stanley, in the wake of those numbers, underscored the resilience and margin potential of the smartphone core business. That assessment is the anchor of the investment case: as long as handsets generate steady cash flow, Xiaomi can fund its expensive automotive expansion. The door-handle recall is a reminder of how quickly that calculus could shift if quality concerns start to accumulate.
A Stock Caught Between Eras
The share price tells the story of a company in transition. At €3.08, the stock sits just above its 50-day moving average of €2.90 but remains 14 percent below the 200-day average of €3.59. Short-term recovery, medium-term skepticism — the technicals mirror the narrative.
Over the past seven trading days, the shares have gained roughly ten percent, a reflection of how volatile this name has become. On a weekly basis, the stock is still up 7.9 percent, buoyed by those quarterly results. The swings are violent, but the underlying trend remains negative.
Founder's Bet: A Decade and 50 Billion Yuan
None of this has deterred founder Lei Jun from his semiconductor ambitions. He has committed ten years and 50 billion yuan to the chip program, with over 21 billion yuan already spent. The O3 launches in September alongside the foldable Xiaomi 18 Fold, with the Pad 9 Pro Max as a second carrier device. The predecessor O1 has already surpassed one million units shipped — evidence, the company argues, that this is a production program rather than a publicity exercise.
The broader pattern is unmistakable: Chinese tech giants are racing to reduce dependence on imported cutting-edge chips, and Xiaomi is positioning itself alongside Huawei as a self-sufficient developer. The strategy only becomes a business model, though, if benchmark records translate into volume and margin. A processor matters economically when it sits inside millions of devices, not a handful of flagship models.
Xiaomi at a turning point? This analysis reveals what investors need to know now.
A Two-Track Portfolio
Xiaomi's September product offensive extends beyond its own silicon. The Poco F9 Pro and F9 Ultra arrive globally on September 1, and the 17T series ships with MediaTek's Dimensity processors. The dual approach is deliberate: flying its own semiconductor flag at the premium end while using partner chips to cover the breadth of the portfolio.
A recent customer satisfaction survey gave Xiaomi top marks for value-for-money, ahead of Samsung and Motorola. That mass-market trust is the foundation the company is building on. Whether those customers will pay a premium for in-house chip technology is the open question — one that will only be answered when the Xiaomi 18 Fold reaches store shelves in September.
For now, the stock remains a study in contradictions: technically impressive, commercially unproven, and caught between a smartphone business that generates the cash and an automotive division that consumes it. The recall is a reminder that in the EV business, trust is the currency that matters most — and it can be spent faster than it is earned.
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