Xiaomi’s Premium Push Collides with Margins as Stock Sinks to New Low

The launch of Xiaomi’s 17T smartphone in India this week was supposed to herald a victory in its push upmarket. Equipped with a Leica co-developed 50-MP main camera, a 5x periscope telephoto lens and a starting price of 59,999 rupees (54,999 with a bank discount), the device runs HyperOS 3 on Android 16 and targets the premium tier. Yet on the very same day, Xiaomi’s stock touched a fresh 52-week low of €2.82 in Europe, extending a slide that has erased more than a third of its value since January.

The disconnect between product ambition and market reception tells a story of widening structural pressures. Xiaomi’s average smartphone selling price hit a record 1,310 RMB in the first quarter, up 8.2% year-on-year, and devices above 3,000 RMB now account for 23.5% of China sales. But the company shipped just 33.8 million phones in the period — a 19% plunge that marks the steepest decline among the top five global manufacturers, according to Omdia. Smartphone revenue came in at 44.3 billion RMB, while the gross margin on that business slumped to 10.1%, squeezed by soaring memory-chip costs.

The chip-market dynamic is a systemic risk often overlooked. Global makers are pivoting production capacity toward high-bandwidth memory for AI servers, tightening supply for smartphone components and inflating prices. Xiaomi, which relies on scale rather than premium pricing to defend margins, is caught in the crossfire. Management is responding with product optimization and a stronger tilt toward higher-priced models, hoping to offset the cost pressure through international expansion.

That strategy, however, is running into the black hole of Xiaomi’s electric-vehicle gamble. The auto division logged an operating loss of 3.1 billion yuan in the first quarter, despite delivering 80,800 vehicles — up 6.6% year-on-year. Its factory in Beijing now churns out a car every 76 seconds, with over 700 robots achieving more than 90% automation in key areas. Yet volume and margins are diverging violently: the manufacturing efficiency is not enough to stanch losses that the smartphone cash cow must now subsidise.

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

Group revenue fell 11% to 99.14 billion yuan in the first quarter, and adjusted net profit collapsed 43.1%. The company’s shares have lost 37% since the start of the year (35.18% according to a second data point), and on a 12-month view the decline is more than 50% — from a 52-week high of €6.69 to a low of €2.82 (€2.86 per another source, closing at €2.91). The relative strength index sits at 28.8 on one reading and 31.8 on another, both deep in oversold territory, while the stock trades more than 33% below its 200-day moving average.

A new share buyback programme worth up to HK$20 billion, effective 2 June, has failed to halt the slide. The market’s indifference is telling: buybacks only prop up prices when investors believe in a fix to the underlying problems. Here they do not. Xiaomi has committed 200 billion yuan to R&D over five years, with a further 60 billion earmarked for artificial intelligence in the next three, and plans to enter the European EV market in the second half of 2027, focusing on premium models.

But markets price the present, not distant promises. The market capitalisation has shrunk drastically. With the cost of memory chips climbing and the EV cash drain intensifying, the core smartphone business must urgently generate enough cash to finance the transformation. The next test comes on 26 August 2026, when Xiaomi reports quarterly results. Without a convincing turnaround, the shares may face another sell-off — even as its premium phones hit store shelves in Mumbai and Delhi.