Xiaomi’s Mega Buyback Fails to Counter the Sting of Surging Memory-Chip Costs
12.06.2026 - 22:14:23 | boerse-global.de
Xiaomi has been furiously buying back its own shares — the 70th repurchase transaction of the year was completed just yesterday, part of a record 20 billion Hong Kong-dollar programme launched in early June. Yet the stock continues to languish. At €2.90, it sits barely above the 52-week low of €2.82 hit on Thursday, and the year-to-date decline stands at 35.45%. The market is voting with indifference, if not outright scepticism.
The problem is not sentiment but fundamentals. Xiaomi’s core smartphone business is being squeezed by a global memory-chip price explosion driven by the AI boom. Data centres are hoovering up supply, and the cost of conventional DRAM is expected to jump 63% in the second quarter, with NAND flash facing a 75% increase. For a manufacturer that dominates the low- to mid-tier segment, where margins are already razor-thin, this is a margin killer.
The impact is already visible in the numbers. First-quarter adjusted net profit plunged 43% to 6.1 billion yuan, well below market expectations. Revenue fell 11% to 99.14 billion yuan. Smartphone shipments tumbled 19% year on year to 33.8 million units — the sharpest decline among the global top five. In China alone, shipments dropped 35% to 8.7 million units. Analysts warn that higher component costs will force Xiaomi to raise prices, potentially driving price-sensitive buyers away. The memory-chip squeeze is expected to last at least until the end of 2027, adding roughly a quarter to the bill of materials for upcoming devices.
Should investors sell immediately? Or is it worth buying Xiaomi?
Meanwhile, Xiaomi’s electric-vehicle ambitions are burning cash at an alarming rate. The auto division posted an operating loss of 3.1 billion yuan in the first quarter, equivalent to approximately $5,600 per vehicle delivered. The company aims to ship around 550,000 cars in 2026, but in the first five months of this year it managed only 150,000 units. To broaden its EV lineup, regulators have approved production of extended-range electric vehicles, and Xiaomi plans to launch a large family SUV under a new sub-brand. The timing is questionable: wholesale sales of such vehicles in China fell nearly 25% in May.
On the product innovation front, Xiaomi this week unveiled a robotic arm for home EV charging that uses an AI camera to locate the car’s port and plug in the cable autonomously. It integrates with the company’s smartphone app, but no price or launch date has been announced. While the gadget underscores Xiaomi’s ambition to build an ecosystem, it does little to address the immediate earnings pressure.
Technically, the stock appears oversold. The relative strength index sits at around 32.5, suggesting a lack of further downside momentum. But all major moving averages are firmly above the current price — the 200-day line is at €4.23, a full 31% higher. Being oversold alone is no reason to call a bottom when the operational headwinds remain so intense. Xiaomi’s buyback strategy may provide a temporary floor, but until the chip-cost cycle turns or the EV business starts to generate positive returns, the shares are likely to remain grounded. The next quarterly report will be a critical test of whether management’s confidence is justified.
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Xiaomi Stock: New Analysis - 12 June
Fresh Xiaomi information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
