Xiaomi’s HK$20 Billion Buyback Fails to Halt Slide as Chip Costs and EV Losses Bite
Published on 05/28/2026 at 04:01 | Redaktion boerse-global.de
Xiaomi has launched a HK$20 billion share buyback programme in a bid to reassure investors, but the move has done little to stem a sell-off that pushed the stock to a 52-week low. The Chinese technology group reported its first quarterly revenue decline in nearly three years, hammered by a near-doubling of memory chip prices and deepening losses in its electric vehicle division.
Shares slumped 4.57% in Hong Kong to HK$28.40 on Wednesday, while the Frankfurt-listed depositary receipt touched €3.14 — the weakest level in 12 months and a 47% drop over the past year. The buyback, due to start on June 2 and run for 12 months, signals management’s belief that the stock is undervalued, though the market has so far disagreed.
Profits Halved by Soaring Memory Costs
Net profit for the first quarter of 2026 tumbled 57% to 4.7 billion renminbi, while adjusted net profit — which strips out certain items — fell 43% to 6.1 billion renminbi, well below analyst expectations. Group revenue declined 11% to 99.1 billion renminbi, reversing the growth trajectory Xiaomi had maintained since the pandemic.
The main culprit is a sharp increase in prices for DRAM and NAND flash memory chips, which have roughly doubled over the past few quarters as supply shortages collide with voracious demand from AI data centres. Operating profit cratered 70% as a result, and Xiaomi’s core smartphone business faces additional pressure from resurgent rivals Apple and Huawei in its home market.
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The flagship handset division, which also includes AIoT devices, generated 79.3 billion renminbi in revenue at a gross margin of 22.5%. Xiaomi shipped 33.8 million smartphones in the quarter and retained its third-place global ranking with an 11.3% market share, according to Omdia — a position it has now held for 23 consecutive quarters.
EV Unit Burns Cash Despite Order Book Momentum
Xiaomi’s electric vehicle arm, long touted as the next growth engine, delivered just 81,000 cars in the first quarter, down sharply from 145,000 in the previous three months. The slowdown is partly due to model changeovers and delays in the YU7 series. The EV segment’s revenue edged up 6.9% to 19.9 billion renminbi, but an operating loss of 3.1 billion renminbi — exacerbated by purchase tax subsidies and higher component costs — erased any hope of near-term profitability.
Management is sticking to its full-year delivery target of 550,000 vehicles, even as Jefferies has trimmed its own forecast to 495,000. The investment bank downgraded Xiaomi to “underperform” on May 27 and cut its price target to HK$25.49, implying 14% further downside from the previous close. Jefferies cited weakening dynamics in the EV business, shrinking smartphone margins, and rising component costs.
Xiaomi has responded by pushing higher-margin models. The YU7 GT, launched on May 21, starts at 389,900 renminbi, boasts 1,003 PS and a 0–100 km/h time of 2.92 seconds. A standard YU7 version was also introduced at 233,500 renminbi. Meanwhile, orders for the all-new SU7 generation have surpassed 80,000 units since the first week of May.
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Aggressive R&D Spending Weighs on Results
Xiaomi continues to bet heavily on future technology, with first-quarter research and development expenses surging 33.4% to 9.0 billion renminbi. Around 26,000 employees now work in R&D — a headcount that adds to fixed costs without an immediate payoff. Goldman Sachs has also lowered its earnings estimates, while management pursues expansion into overseas markets to offset domestic pricing pressure.
The buyback, which began with a HK$10 million purchase of 349,400 shares on May 27, may provide a floor for the stock. But with adjusted net profit shrinking and the EV business still bleeding cash, Xiaomi’s turnaround hinges on whether its costly bets can finally translate into sustainable margins.
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