Xiaomi's Stock Rallies on Restructuring News Even as a Memory Chip Crisis Pressures Fundamentals

Xiaomi’s shares have staged a sharp weekly advance, climbing 13.71% to close at €2.94, as two competing narratives play out for investors. On one side, cost-cutting measures and a surprising AI model have rekindled optimism; on the other, a severe memory chip shortage is forcing the cancellation of a flagship smartphone and deepening the company’s structural challenges. The rally, while substantial, leaves the stock still nursing a year-to-date loss of 34.61%.

The memory chip crisis is the most immediate drag. DRAM and NAND components now cost four to five times what they did a year ago, squeezing margins across the smartphone industry. Research firms Counterpoint and Omdia report that global second-quarter shipments fell by as much as 11% and 4% respectively, making it the weakest Q2 since 2013. Xiaomi has been especially hard hit: its market share slipped to 11–12%, trailing both Samsung (22–24%) and Apple, which reached a record 20% for a second quarter. The company has slashed its 2026 shipment target to around 95 million units, a roughly 44% cut from earlier plans. More strikingly, development of the planned Xiaomi 18 Ultra flagship has been halted entirely, with the 18 Pro Max now serving as the interim top model. At the budget end, memory components already account for over 60% of total material costs.

Against this backdrop, Xiaomi appears to be trying to tighten operations. The Chinese business outlet Caixin reported that the company has been trimming jobs since March across its smartphone, automotive, internet, and international divisions, affecting functions from R&D to marketing. The scale of the cuts varies by department and follows no uniform pattern. Xiaomi denied that a coordinated mass layoff program was underway, describing the moves as routine business adjustments. Market observers note that mass layoffs carry political sensitivity in China, which may explain the company’s careful messaging. At the same time, Xiaomi recently unveiled its MiMo AI model, which analysts consider more capable than many had expected, adding a spark of technological optimism that has helped lift the stock.

Should investors sell immediately? Or is it worth buying Xiaomi?

The technical picture remains mixed. At €2.94, the stock stands 2.12% below its 50-day moving average of €3.00 and a significant 24.21% below the 200-day average of €3.87, underlining that the long-term downtrend is still intact. The relative strength index at 59.7 suggests neutral conditions, while annualized 30-day volatility of 41.77% points to continued large swings in either direction. The stock is now 25.42% above its 52-week low of €2.34 from June, but remains 54.89% below the September 2025 peak of €6.51. Market capitalisation stands at roughly €74.81 billion.

The fundamental headwinds show little sign of abating soon. Analysts at Omdia and Counterpoint expect chip shortages to persist well into 2027, with memory price relief unlikely before the second half of that year. Xiaomi faces a difficult choice: raise prices and risk dampening demand in its price-sensitive mass market, or absorb higher costs and watch margins erode further. Apple, by contrast, has kept pricing stable and is benefiting from a strong iPhone cycle. For the full year 2026, industry-wide smartphone shipments are expected to fall by around 14%.

Whether the current rally is more than a technical bounce will depend on whether the restructuring delivers measurable cost savings in upcoming earnings reports. Until then, the stock is caught between a short-term narrative of operational tightening and the relentless pressure of a memory-chip crisis that shows no mercy.

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Xiaomi Stock: New Analysis - 14 July

Fresh Xiaomi information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

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