Xiaomi Lifts Phone Target to 110 Million Despite Steep Profit Drop and Memory-Chip Squeeze
Published on 07/22/2026 at 13:41 | Redaktion boerse-global.de
Xiaomi is sending two sharply different signals to the market. The Chinese electronics giant has raised its 2026 smartphone delivery target by 16 percent to 110 million units, betting that memory-chip prices will cool in the second half of the year. Yet the company’s first-quarter results tell a far grimmer story: adjusted net profit tumbled 43.1 percent to 6.07 billion yuan on revenue of 99.14 billion yuan, down 10.9 percent from a year earlier.
The stock slipped 2.16 percent on Wednesday to €3.02 in Hong Kong, having closed at €3.08 the prior session. Over the past 30 days, however, the shares have gained 16.42 percent, reflecting a short-term recovery from the year’s lows. The gap to the 52-week high of €6.51 from September 2025 remains a yawning 52.6 percent.
Smartphone Core Under Pressure as Memory Costs Bite
Xiaomi’s handset business, still its primary revenue driver, saw shipments fall 19.2 percent to 33.8 million units in the first quarter, with segment revenue dropping 12.5 percent to 44.3 billion yuan. President Lu Weibing noted that a device with 12GB of RAM and 512GB of storage now costs 1,500 yuan more to build than in 2025 — a burden the company cannot fully pass on to consumers. The average selling price did climb 8.2 percent to a record 1,310 yuan, offering some margin relief.
The industry-wide memory crisis is acute. Counterpoint Research expects global smartphone shipments to fall 13.9 percent to about 1.08 billion units in 2026, the lowest since 2013, as LPDDR4/5 chip prices double between the fourth quarter of 2025 and the second quarter of 2026. Omdia data shows that memory and storage components now account for more than 60 percent of bill-of-materials costs for entry-level devices. Xiaomi held 11 percent global market share in the second quarter, ranking third behind Samsung and Apple.
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In India, a key growth market, smartphone shipments dropped 13 percent to 33.9 million units in the second quarter. Xiaomi maintained a 13 percent share there, supported by its Redmi 15A and Redmi A7 series.
Auto and AI Offer a Counter-Narrative
Xiaomi’s electric-vehicle business provided a rare bright spot. Revenue from the auto segment rose 6.9 percent to 19.9 billion yuan, with deliveries exceeding 80,000 vehicles. The company plans to introduce new models later this year.
Research and development spending jumped 33.4 percent to 9 billion yuan in the quarter, with at least 16 billion yuan earmarked for artificial intelligence in 2026 alone — part of a three-year commitment exceeding 60 billion yuan. Xiaomi claims its MiMo-V2.5-Pro language model leads the open-source AI ranking at Artificial Analysis. With cash reserves of more than 220 billion yuan, the company has the financial firepower to sustain these investments even as smartphone margins remain under pressure.
Buyback Program Underway as Analysts Split on Outlook
A share repurchase program of up to 200 billion Hong Kong dollars began on June 2 and runs for one year. By late January, Xiaomi had bought back 7 million shares for 94.73 million Hong Kong dollars, and the cumulative buyback volume for the year had surpassed 8.4 billion Hong Kong dollars. The broader context includes a wave of Chinese state-owned enterprises and companies using buybacks to stabilize domestic capital markets.
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Analyst reactions to the raised shipment target are divided. CLSA called the 110-million-unit goal difficult to justify given actual deliveries of 165 million in 2025 and just 33.5 million in the first quarter of 2026. The research house forecasts a 15 percent decline in shipments and a 10 percent drop in revenue for the full year, arguing that memory prices are unlikely to ease as Xiaomi expects. Still, CLSA maintained its “Outperform” rating.
Goldman Sachs took a different view, reaffirming its Buy rating on July 22 with a focus on Xiaomi’s robotics business as a future growth driver. The stock currently trades 2.62 percent above its 50-day moving average of €2.94, but has lost 30.29 percent since the start of the year — a reminder that the memory-chip headwinds, however temporary they may prove, have not yet been priced out by the market.
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