Xiaomi's stock has declined for two consecutive sessions following a report from Omdia confirming that the company lost ground in the global smartphone market during the second quarter. Shares in Hong Kong fell to HKD 25.82, below the monthly high of HKD 26.70, as investors weighed the implications of weaker market positioning.
Market Share Erosion Amid Rival Gains
According to Omdia, Xiaomi's global smartphone market share dropped to 11% in Q2, making it the third-largest player behind Samsung and Apple. This marks a continued decline from the 15% share the company held in the same period last year. In contrast, Samsung captured 22% of the market, while Apple held 20%.
The report attributed Samsung's gain partly to the delayed launch of its S26 series, which pushed some demand into the second quarter, as well as strength in the budget segment. Apple's sales were boosted by the iPhone 17, which Omdia described as delivering the strongest refresh and upgrade cycle in the company's history.
Budget Segment Pressures
Xiaomi's retreat occurred as vendors in the sub-$400 mass market shifted strategy away from prioritizing volume toward adjusting retail prices and focusing on premium segments. Rujan Bjorvovde, Principal Analyst at Omdia, noted that managing surging component costs has become extremely complex, with some vendors facing memory costs four to five times higher than a year ago.
Memory and storage now account for approximately 60% of the bill of materials for budget devices, a cost burden that disproportionately affects Xiaomi's core market. Apple has already warned of price increases for its next models, signaling that the memory crisis is far from over.
Financial Performance Under Pressure
Xiaomi's most recent earnings report showed revenue of RMB 99.14 billion in Q1, down from RMB 111.29 billion a year earlier. Smartphone revenue fell 10% to RMB 79.3 billion. Profit for the period dropped to RMB 4.7 billion from RMB 10.89 billion, reflecting significant margin compression.
Partially offsetting the smartphone weakness, the company's smart EV, AI, and New Initiatives segment posted a 6.9% revenue increase to RMB 19.9 billion, supported by higher vehicle deliveries. Xiaomi delivered 80,856 vehicles in Q1, up from 75,869 in the prior quarter, though lower prices weighed on segment profitability. Analysts expect these trends to have continued into Q2 as smartphone sales remained under pressure.
Technical Outlook
From a technical perspective, Xiaomi's stock has been in a prolonged downtrend, falling from a high of HKD 61.45 in June last year to current levels. The shares have slipped below the 61.8% Fibonacci retracement level, a zone that often attracts buyers, and remain beneath both the 50-day and 200-day moving averages.
With the next earnings report expected in August, the near-term bias appears bearish. A further decline could see the stock test support near HKD 21.35, a level that may provide a floor if fundamentals do not deteriorate further.
This article is for informational purposes only and does not constitute financial advice.
