Xiaomi Navigates Chip Shortage with Aggressive EV and AI Push

The Chinese technology giant Xiaomi is accelerating its investments in electric vehicles and artificial intelligence, even as a severe memory chip shortage threatens its core smartphone business. This dual narrative of expansion and constraint is defining the company’s current strategic posture.

Core Business Under Pressure from Soaring Component Costs

Xiaomi’s primary smartphone operations face significant headwinds. A major supply crunch for memory chips, driven by suppliers like Samsung and SK Hynix shifting capacity toward lucrative AI data centers, has caused prices for smartphone memory modules to double or even triple in recent weeks. Market analysts project this will force Chinese device manufacturers to raise retail prices by an average of 1,000 to 2,000 RMB this year.

This margin pressure is reflected in the company’s stock performance. Shares closed Friday at 3.59 euros, hovering near the 52-week low of 3.44 euros marked in early March. Since the start of the year, the equity has lost over 20 percent of its value.

In response, management is pursuing vertical integration to safeguard profitability and reduce reliance on external suppliers. A key initiative is the deployment of its in-house 3nm “Xuanjie O1” processor. Concurrently, the company is preparing to launch its first fully AI-native smartphone, currently known as the “Xiaomi miclaw” model, which is in closed testing. The strategic goal is to integrate AI agents across its product ecosystem, aiming to capture market share in Europe and Japan and offset rising hardware costs with value-added software.

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Electric Vehicle Division Charges Ahead with Strong Debut

Contrasting the challenges in smartphones, Xiaomi’s foray into electric mobility is gaining remarkable early traction. CEO Lei Jun confirmed this Sunday that the company delivered up to 5,000 units of its new SU7 electric sedan in the model’s first week alone. With a backlog of more than 30,000 firm orders, the automaking ambitions of the tech firm are receiving substantial validation.

The SU7 sedan boasts technical specifications designed to compete, including a range of up to 902 kilometers and a standard LiDAR system for automated driving capabilities.

Massive AI Investment Fuels Long-Term Strategy

Parallel to its automotive push, Xiaomi is committing enormous capital to build its AI infrastructure. The company plans to invest 60 billion yuan (approximately 8.7 billion US dollars) into artificial intelligence over the next three years. A significant portion of this funding is directed toward developing proprietary large language models, such as the MiMo-V2-Pro, which, with one trillion parameters, already ranks among international leaders.

This aggressive spending across EVs and AI, set against a difficult smartphone market, illustrates Xiaomi’s attempt to pivot its growth engines while defending its core business against unprecedented supply chain volatility.