Xiaomi Shares Hit Seven-Month Low as Rising Chip Costs Threaten Smartphone Pricing

Xiaomi Corp (HK:1810) saw its shares tumble to a seven-month low on Wednesday after the Chinese electronics giant signaled that rising global memory chip prices could soon force an increase in smartphone costs. The stock fell 4.7% to HK$38.88—its weakest level since early April—and became the biggest drag on the Hang Seng Index, which slipped 0.6% as tech stocks broadly declined.

The company reported mixed third-quarter results. Xiaomi’s revenue grew 2.3% year-over-year to 113.1 billion yuan (about $16 billion), falling short of Reuters/LSEG expectations of 116.5 billion yuan. However, the company delivered a significant profit boost, with net income surging 80.9% to 11.3 billion yuan, beating estimates of 10.3 billion yuan. Strong smartphone demand and steady sales of smart gadgets helped support results, while Xiaomi’s electric vehicle (EV) division recorded its first profitable quarter—a milestone that underscored the brand’s expanding footprint beyond consumer electronics.

Xiaomi also achieved notable momentum in EV sales, even surpassing Tesla China in October—a development that reinforces its growing presence in the competitive electric vehicle market. But despite these bright spots, concerns about rising component costs weighed heavily on investor sentiment.

During the post-earnings call, Xiaomi President Lu Weibing warned that global memory chip prices—driven higher by surging demand in artificial intelligence infrastructure—have reached unprecedented levels. He noted that while Xiaomi may raise retail smartphone prices, the increases may not fully offset the higher component costs. This warning is particularly significant given that Xiaomi remains the world’s third-largest smartphone maker, trailing only Apple and Samsung. Although the company continues to expand into EVs and other electronics, smartphones still account for the majority of its earnings.

As rising chip prices threaten to squeeze margins, investors will be watching closely to see how Xiaomi balances product pricing, profitability, and competitiveness in the coming quarters.