Xiaomi's Balancing Act: EV Momentum and a Semiconductor Windfall Can't Mask the Handset Slide
Published on 08/09/2026 at 09:40 | Redaktion boerse-global.de
The numbers coming out of Xiaomi's smartphone division make for grim reading, yet the company's broader narrative has rarely been busier. Global handset shipments contracted 6 percent to 272 million units in the second quarter of 2026, according to Omdia, with Xiaomi absorbing a 26 percent year-on-year drop to 31.2 million devices — the steepest decline among the world's top five manufacturers. Rivals OPPO and vivo fared only marginally better with falls of 17 and 18 percent respectively, while Samsung advanced 5 percent to 60.5 million units and Apple surged 23 percent to 55.1 million, giving the pair market shares of 22 and 20 percent.
The culprit, per the research firm, is the soaring cost of memory chips — a headwind squeezing margins across the industry. But Xiaomi's pain is compounded by the timing: its automotive and AI ambitions require heavy capital, and the handset unit remains the financial backbone of the group.
A Quarter of Contradictions
Xiaomi's first-quarter 2026 results, published back in late May, laid the divergence bare. Group revenue reached 99.1 billion yuan, down 10.9 percent year on year, while adjusted net profit tumbled 43.1 percent to 6.07 billion yuan. On a GAAP basis, the slide was even steeper at 57 percent, leaving net income at 4.72 billion yuan. Smartphone revenue specifically fell 12.5 percent to 44.273 billion yuan, with the average selling price hovering at 1,310 yuan per device.
Yet the EV division continues to defy the gloom. Electric vehicle revenue climbed 6.9 percent to 19.9 billion yuan, with more than 80,000 cars delivered in the quarter. IoT margins held at 25.2 percent, internet services at 76.1 percent, and the connected-device ecosystem expanded to 1.119 billion units. Research and development spending rose 33.4 percent to 8.95 billion yuan, and the company has committed to investing at least 16 billion yuan in artificial intelligence this year alone, with a three-year target exceeding 60 billion yuan. Its homegrown MiMo-V2.5-Pro language model, the company claims, now ranks first globally among open-source models. Cash reserves above 220 billion yuan provide the buffer to fund this dual-pronged strategy.
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New Metal, New Models
The product pipeline is moving in tandem. A regulatory filing in China has revealed a new entry-level version of the YU7 electric SUV, fitted with a 73-kWh battery and a CLTC-rated range of up to 643 kilometers, while shedding 115 kilograms versus the standard variant. On the handset side, the Xiaomi 17 Max marks the return of a 6.9-inch display to the lineup for the first time in eight years, pairing it with a large battery, dual fast-charging and a top-tier camera — albeit in a design described as comparatively conservative.
Then came the late-July surprise. On July 27, CEO Lei Jun unveiled two new SUVs under a standalone product line called SkyNomad: the seven-seat N90 Max and the five-seat N70 Max, neither of which shares a platform with the existing YU7. The market responded enthusiastically on the day, sending the stock up 7.47 percent to 3.22 euros. That enthusiasm, however, proved short-lived.
A Stock Under Pressure
By the close of last Friday, Xiaomi shares had settled back at 3.04 euros, a daily gain of 2.13 percent but a far cry from the September 2025 peak of 6.54 euros. The year-to-date loss stands at 29.83 percent, and the stock remains more than half — 53.57 percent, to be precise — below that 52-week high. The volatility has become a defining feature for holders.
Management has not been idle on the capital-markets front. In January, Xiaomi arranged an automated share buyback program worth 2.5 billion Hong Kong dollars (roughly 295 million euros), executed through an independent broker and running from January 23 until the 2026 annual general meeting or until the sum is exhausted. The Hong Kong exchange granted an exemption for the program. Separately, the company's investment in Chinese memory-chip maker CXMT paid off when the firm made its stock-market debut in late July, reinforcing Xiaomi's push to embed itself deeper in China's semiconductor supply chain.
That vertical-integration ambition was telegraphed earlier in the year, when Lei Jun pledged a "grand assembly" of proprietary chips, an operating system and AI systems in 2026 — a bid to reduce reliance on Qualcomm and Google while tightening the ecosystem's internal coherence. The strategy carries added weight given the margin squeeze in the core handset business.
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What Comes Next
On the product front, the Redmi sub-brand teased a major announcement at ChinaJoy 2026 in Shanghai, likely from the K100 series, featuring a 185-Hz OLED display and an 8,500 mAh battery. Xiaomi also pushed out a security update for nine smartphones and tablets on Thursday, though the specifics remain undisclosed. No analyst rating changes or price-target revisions have surfaced in the past two weeks.
The central question for investors is whether the third quarter will show a continuation of the handset slide or whether new devices like the Xiaomi 17 Max can arrest the decline. The EV division, meanwhile, keeps adding chapters to its story — most recently a 7:22.755-minute lap for the YU7 GT around the Nürburgring Nordschleife, a sporting flourish that underscores how far the company has come from its smartphone roots. Whether that narrative can eventually lift the share price back toward its former highs is a question the coming earnings reports will have to answer.
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