Chinese tech giant Xiaomi accelerates its move into the premium smartphone and electric vehicle markets, despite short-term earnings pressure from a global memory-chip shortage and declining budget phone sales.
Xiaomi is pressing ahead with a strategic shift that is improving its average selling prices but weighing on near-term earnings. Analysts at China International Capital Corporation and Morgan Stanley both expect second-quarter results to show weaker revenue and profit as the company moves away from lower-priced handsets and absorbs the impact of a global memory-chip shortage. The shift appears to be working on pricing: average selling prices are forecast to reach a record 1,340 yuan, even as unit sales soften.
That pressure is being felt most sharply in the budget segment. Industry research cited by Tom’s Hardware suggests smartphones below $400 are facing a severe squeeze as DRAM and NAND costs rise and memory makers prioritise artificial intelligence-related production. Omdia expects sales in that bracket to fall sharply next year, while phones above $400 are still projected to grow. For Xiaomi, that leaves less room to compete at the bottom of the market, pushing it towards higher-end devices and thinner volume.
The company’s results on 18 August will also come with a board review of unaudited interim figures and a possible interim dividend. First-quarter numbers already showed the strain, with revenue, adjusted profit and net income all falling year on year. Xiaomi’s smartphone business, still its core division, posted a double-digit decline, even as the company’s connected-device ecosystem continued to expand.
Management has also been active on capital returns. Xiaomi has carried out multiple share buybacks in recent weeks and has an outstanding repurchase mandate that allows for substantial further purchases. A separate buyback programme, announced earlier this year, runs through to the 2026 annual general meeting or until the allocated amount is used. Even so, the stock has remained under pressure despite a brief lift after the unveiling of the SkyNomad SUV line.
That vehicle launch marks Xiaomi’s biggest move beyond battery-only cars. According to company announcements and reporting from TechRadar and other automotive outlets, SkyNomad will be Xiaomi’s first extended-range electric vehicle line, with the N70 and N90 due to be offered in five- and seven-seat formats. The vehicles pair a petrol engine with a large battery pack, giving them both long electric-only range and extended total driving range. Xiaomi has said deliveries should begin in September.
The wider car strategy remains ambitious. Lei Jun has said cumulative deliveries of the SU7 and YU7 have passed 700,000 units, while Xiaomi’s 2026 vehicle target stands well above last year’s deliveries. The company is also pushing deeper into chips and software, with plans for proprietary semiconductors, an operating system and AI systems intended to reduce reliance on outside suppliers. That broader industrial push may matter as much as the handset turnaround, because Xiaomi’s latest numbers suggest the company is trying to build a premium consumer electronics and mobility business at the same time as it exits the cheapest part of its old one.
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