Xiaomi Bets on HyperOS 4 and Premium Shift to Weather a Memory-Chip Margin Squeeze
Published on 07/05/2026 at 14:13 | Redaktion boerse-global.de
Xiaomi shares have clawed back some ground after a brutal stretch, closing Friday at €2.65 with a daily gain of 3.31% and a weekly advance of 7.77%. Yet the stock remains deep in the red for 2025, nursing a year?to?date loss of 40.98% and still trading 13.50% below its 50?day moving average of €3.06. The rally, driven by fresh delivery numbers and a major software announcement, is testing whether short?term momentum can overcome a structural cost crisis in memory chips.
Memory?chip prices have become the single biggest threat to Xiaomi’s core margins. Since the third quarter of 2025, contract prices for smartphone memory have roughly quintupled, while television?chip costs have surged nearly ten?fold, according to President Lu Weibing. The culprit: Samsung, SK Hynix and Micron have pivoted production capacity toward AI data centres, squeezing supply for consumer electronics. Counterpoint Research expects no respite before the end of 2027, and Chairman Lei Jun has warned investors that the cost pressure could persist for another two years. The damage is already visible: first?quarter 2026 net income tumbled 57% to ¥4.72 billion, and revenue slid 11% to ¥99.14 billion.
Xiaomi is fighting back on two fronts: software efficiency and product mix. Next month the company will launch HyperOS 4, a new operating?system generation based on Android 17. Developers have rewritten core components in Rust and Flutter, slashing RAM consumption and speeding up the system. The move is strategically vital because lower memory requirements allow Xiaomi to use cheaper hardware components, protecting profit margins in the cut?throat smartphone market. A new “Liquid Glass Design” is also intended to boost the aesthetic appeal of devices without adding cost.
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At the same time, Xiaomi is accelerating its push into higher?priced models. Despite a 19% drop in global smartphone volume to 33.8 million units in the first quarter, average selling prices are rising as the company prioritises premium devices over low?margin entry?level handsets. The services segment, structurally profitable, helps offset some of the hardware squeeze. Management has also deployed a fresh share?buyback programme of up to HK$20 billion over twelve months, replacing a previous scheme under which the company repurchased roughly 399.6 million Class?B shares for about HK$14.6 billion.
The electric?vehicle division, meanwhile, remains a wild card. June deliveries again exceeded 30,000 cars, bringing the first?half total to around 180,000 units. To achieve the ambitious annual target of 550,000 vehicles, Xiaomi must now average 60,000 deliveries per month in the second half — a steep ramp?up that depends heavily on its second plant in Beijing. The new SUV model YU7 is also poised for launch. But the EV business, which briefly turned profitable a year ago, has swung back to an operating loss in the billions, adding to the drag on group earnings.
The market’s wait?and?see mood is reflected in the technical picture. After hitting a 52?week low of €2.34 on 26 June, the stock has recovered, and the relative strength index at 40.5 shows the extreme oversold condition has eased. Yet the 200?day moving average of €3.97 sits 33.24% above the current price, a reminder of how far the recovery still has to go. Annualised volatility of 34.72% underscores that swings in either direction remain large.
The next hard test arrives on 26 August, when Xiaomi reports second?quarter 2026 results. Until then, the trajectory of memory?chip prices and the monthly EV delivery numbers will serve as the leading indicators. If the cost pressure eases even modestly or the auto division accelerates toward its target, the stock could push toward the 50?day line. If the margin squeeze deepens or EV losses widen further, the recent bounce may prove to be no more than a technical pause before another test of the year’s low.
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