Xiaomi, often dubbed 'China's Apple,' has seen its stock enter a steep decline, losing more than $118 billion in market value over the past year. The shares have fallen from a high of H$61.55 to H$22.62, their lowest level since September 2024, as the company grapples with surging memory chip prices and a slowdown in its electric vehicle business.
Memory Price Surge Squeezes Margins
A key driver of Xiaomi's downturn is the global rise in semiconductor and memory prices. Unlike Apple, which designs its own chips, Xiaomi relies on suppliers such as SK Hynix, Micron, and Samsung Electronics. These companies have raised prices amid strong demand, forcing smartphone makers to pass costs to consumers. Apple recently signaled it will hike iPhone prices, and Xiaomi faces similar pressure. Higher prices could dampen demand in a market already contracting.
Xiaomi's first-quarter results underscore the strain. Revenue fell 10.9% year-over-year to RMB 99.14 billion, while profit plunged 56.5% to RMB 4.7 billion. Operating profit dropped 60% to RMB 5.3 billion. Smartphone shipments declined to 33.8 million units from 41.8 million a year earlier.
EV Business Faces Headwinds
Xiaomi's electric vehicle segment, once a growth driver, is also faltering. After Beijing ended EV subsidies earlier this year, deliveries fell to 80,856 units in Q1 from 145,115 in Q4 2024, as customers rushed to buy before the subsidy expiration. The broader EV sector has seen a sharp sell-off, with Tesla and other stocks declining. Xiaomi's EV ambitions now face an uncertain demand environment.
To counter the slump, Xiaomi has turned to share buybacks, repurchasing 250 million shares worth over H$8.4 billion. While this reduces the share count, it has not stemmed the stock's decline.
Technical Analysis Points to Further Downside
From a technical perspective, Xiaomi's stock has broken below key support levels. The weekly chart shows a triple-top pattern at H$61.5, with a neckline at H$36. The stock has fallen below the 50-week exponential moving average and the 61.8% Fibonacci retracement level. The relative strength index is in oversold territory, suggesting continued bearish momentum. The next major support lies at H$19.86, the 78.2% retracement level.
For context, Apple has also warned of price hikes due to memory costs, as reported in Apple Stock Under Scrutiny as Tim Cook Warns of Unavoidable Price Hikes on Memory Costs. Meanwhile, Intel's recent chip deal with Apple highlights the shifting dynamics in the semiconductor space, detailed in Intel Shares Hit Record $141.45 on Apple Chip Deal Reports, Mizuho Boost.
Xiaomi's challenges are compounded by a broader slowdown in China's economy and consumer spending. The company's diversification into EVs has not yet offset the weakness in its core smartphone business. With memory prices expected to remain elevated and EV subsidies gone, Xiaomi's near-term outlook remains challenging.
This article is for informational purposes only and does not constitute financial advice.
