Xiaomi’s Premium Tech Offensive Hits Wall at 3.05 Euros as Dilution Anxiety Overwhelms Product Progress

Xiaomi is executing the kind of vertical integration that typically wins applause in launch halls and conference rooms. Its next MIX Fold 5 smartphone will pack three in-house technologies — a custom processor, a proprietary operating system and a company-built AI model — a feat rare even among the largest handset makers. Yet at the stock market, none of it is registering. The equity closed at €3.05 on Friday, a whisker above a 52-week low and nursing a 32% loss since the start of the year.

The MIX Fold 5 is set to feature the Xuanjie O3 chip, Xiaomi’s third-generation homegrown processor manufactured by TSMC on a 3‑nanometer process with clock speeds above 4 GHz. It will run HyperOS 4 and the MiMo large language model, which the company develops entirely in-house. President Lu Weibing argued earlier this month that only full control over software and device experience can guarantee a seamless ecosystem across smartphones, cars and smart-home products. Xiaomi has been researching AI since 2016 and had more than 3,000 staff in its AI team by August 2023.

The economics behind the push into ultra‑premium territory are clear. Rising costs for memory chips are squeezing margins in the mass market, and owning the silicon and software stack gives Xiaomi pricing power and differentiation. The MIX line — which popularised edge‑to‑edge displays back in 2016 — returns after a hiatus with the ambition of ditching external suppliers entirely. No launch date has been announced yet.

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

But the market is preoccupied with an entirely different narrative. On June 5, management bought back 3.5 million shares in a bid to shore up confidence. The move backfired among investors who see it as little more than cosmetic window dressing. A standing equity issuance mandate hangs over the stock, stoking fears of dilution. The sheer scale of capital required for the electric‑vehicle and artificial‑intelligence expansions means more fundraising is likely, analysts point out.

Macro headwinds are compounding the bearish sentiment. Strong US jobs data stoked rate‑hike fears and slammed the entire technology sector, dragging Xiaomi to its current level just above the recent trough of €2.97. The stock now trades almost 30% below its 200‑day moving average — a stark measure of medium-term weakness. The relative strength index sits at 37, inching toward oversold territory but not yet flashing a reversal signal.

This week all eyes are on global tech sentiment. If selling pressure from Wall Street persists, the support at €2.97 could be tested directly. A break below that level would further darken a technical picture that already suggests the market cares far more about balance‑sheet strain than about chip design breakthroughs.