Xiaomi's stock continues to face significant headwinds in 2025, trading at $25.60 in Hong Kong, a 58% decline from its all-time high. The company is grappling with a challenging environment across its electric vehicle, smartphone, and tablet segments, while broader market conditions in China add to the pressure.
EV Sector Struggles Weigh on Xiaomi
The Chinese electric vehicle market is experiencing a downturn, with major players like Nio, Li Auto, XPeng, BYD, and Polestar seeing their shares tumble. Nio's stock has dropped over 50% from its April highs, and the sector is facing rising operational costs and softer domestic demand following the end of government stimulus measures. China has also removed the EV sector from its list of priority industries, further dampening growth prospects.
Xiaomi's EV unit has been affected by these trends. Monthly deliveries fell for two consecutive months, with September figures reaching 40,015 vehicles—a record high but still down 4.6% year-over-year. The decline reflects broader industry challenges rather than company-specific issues, but it underscores the difficult operating environment.
Rising Memory Costs Squeeze Smartphone Margins
In the smartphone segment, Xiaomi is facing margin pressure as memory prices surge. Suppliers like Micron and SK Hynix are prioritizing the fast-growing data center market, leading to memory component prices more than doubling year-over-year. This cost increase is hitting Xiaomi's profitability, as it cannot fully pass on higher costs to consumers in a competitive market.
Xiaomi's smartphone shipments in the second quarter stood at 31.2 million units, making it the third-largest vendor globally, but that figure was 26% lower than the same period last year. This decline was the steepest among major brands, with Samsung seeing a 5.3% increase and Apple a 23.1% rise. The tablet business also deteriorated, with shipments falling 6.8% year-over-year to 2.8 million units.
Revenue Declines Amid Multiple Pressures
These challenges have taken a toll on Xiaomi's financial performance. Revenue for the latest quarter came in at over 108 billion yuan, down from 116 billion yuan a year earlier. The combination of EV delivery slowdowns, rising memory costs, and weaker tablet sales has created a multi-front battle for the company.
Technical Outlook Points to Further Weakness
From a technical perspective, Xiaomi's stock has been in a sustained sell-off, making it one of the worst performers in the Hang Seng Index. The shares have fallen below the 61.8% Fibonacci retracement level and formed a death cross pattern, where the 50-week moving average has dropped below the 200-week moving average. This bearish signal suggests that sellers remain in control, and the next key support level to watch is the 78.6% retracement at $19.65.
Investors will be closely monitoring whether Xiaomi can stabilize its EV deliveries and manage cost pressures in its core businesses. The company's ability to navigate these challenges will be critical in determining whether the stock can find a bottom or continue its downward trajectory.
This article is for informational purposes only and does not constitute financial advice.
