Xiaomi’s Strategic Pivot: Humanoid Robots Debut Amid Core Business Headwinds

At the Mobile World Congress, Xiaomi’s founder and CEO, Lei Jun, unveiled a significant technological milestone: the company’s proprietary humanoid robots have commenced operations within its electric vehicle (EV) production line. This foray into advanced robotics unfolds against a backdrop of severe analyst downgrades for the company’s stock, raising questions about whether this innovation can offset substantial pressures in its primary smartphone business.

Management Responds with Aggressive Share Buybacks

In a direct response to the declining share price, Xiaomi’s executives have significantly accelerated their share repurchase initiative. The company acquired 3.2 million of its own shares on March 3 alone. Throughout February, buyback activity exceeded HK$3.2 billion, marking the most substantial repurchase effort in over two years. An ongoing program authorizes further buybacks of up to HK$2.5 billion. Despite this clear signal of confidence from management, investor sentiment remains tepid. The stock is currently trading just above its 52-week low, reflecting a year-to-date loss of approximately 17%.

Jefferies Slashes Price Target on Smartphone Woes

Coinciding with the robotics announcement, analysts at Jefferies delivered a stark reassessment of Xiaomi’s valuation, cutting their price target by 30% to HK$30.45. The downgrade is primarily driven by a toxic mix of collapsing smartphone shipments and skyrocketing component costs. Jefferies forecasts a 55% plunge in handset deliveries, only partially mitigated by a 31% increase in the average selling price.

The firm warns that gross margins in the smartphone segment could collapse to a historic low of 4%. This pressure stems from a dramatic surge in memory costs; prices for mobile DRAM climbed 70% in Q1, while NAND flash prices jumped 80%. The cost for memory in an average Android device is estimated to have increased roughly 3.6-fold year-over-year. This poses a particular threat to Xiaomi, as about 60% of its smartphones are sold in the sub-$150 category, which is most vulnerable to such cost shocks.

Robotics “Interns” Log Productive Hours on Factory Floor

In their inaugural practical test, two of Xiaomi’s humanoid robots completed a three-hour autonomous shift at a screw-fastening station in the EV plant. The machines achieved a success rate of 90.2% in bilateral assembly, completing tasks at a cycle time of 76 seconds per vehicle. These robots are built on Xiaomi’s in-house VLA model, “Xiaomi-Robotics-0,” which integrates visual perception, language processing, and motion control.

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

President Lu Weibing offered a tempered description of the deployment to CNBC, characterizing the robots as “interns” without an official job role. However, CEO Lei Jun outlined an ambitious vision, stating plans to deploy humanoid robots in large volumes across Xiaomi’s factories within the next five years. This aligns with RBC Capital Markets’ projection of a global humanoid robot market worth $9 trillion by 2050, with China positioned as the largest single market.

Additional Challenges in India and EV Sector

Further complicating the outlook, a tax dispute is escalating in India. Authorities have accused Xiaomi of evading customs duties on royalty payments. The original claim of $72 million could potentially double to over $150 million with penalties, while approximately $610 million of the company’s assets remain frozen in the country.

In its nascent EV business, Xiaomi reported February deliveries of over 20,000 units, a notable drop from January’s 39,000. Management attributed the decline to seasonal effects surrounding the Chinese New Year holiday. The company’s delivery target of 550,000 vehicles for 2026 has disappointed some investors, and an ongoing price war in the EV sector continues to exert pressure on profitability.

Annual Results and Dividend Decision Loom

All eyes are now on March 24, when Xiaomi’s board will review the full-year 2025 financial results and consider declaring its first final dividend since its initial public offering. For the first nine months of 2025, the company posted robust growth, with revenue climbing 32.5% to over RMB 340 billion and profit surging 140% to more than RMB 35 billion. These upcoming figures will be scrutinized for evidence that the strategic shift toward robotics and AI can indeed counterbalance the profound challenges facing its core smartphone operations in the medium term.