Analysis: Smartphone Sales Pressure, EV Uncertainty Cloud Xiaomi’s Record Earnings
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Several brokerages cut their price targets on Xiaomi Corp’s stock even after the electronics giant reported record revenue and profit for 2025, reflecting growing investor anxiety over whether the company can sustain growth across its core smartphone and emerging automotive businesses amid supply chain and policy headwinds.
CMB International lowered its price target on Xiaomi’s shares to HK$44.47 from HK$47.16, citing rising memory prices and Beijing’s decision to cut back its tax break for new-energy vehicle (NEV) purchases as headwinds for the Chinese tech giant. BofA Securities made a similar prediction, cutting its price target on Xiaomi to HK$40 from HK$45.
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- Brokerages cut Xiaomi price targets (CMB to HK$44.47, BofA to HK$40) despite 2025 revenue up 25% to 457.3B yuan, profit up 43.8% to 39.2B yuan; stock halved to HK$33.
- Smartphone Q4 revenue fell 13.7% to 79.7B yuan amid 75% DRAM price surge; memory now 30-40% of BOM.
- EV deliveries hit 411,100 (+200.4%), profitable; IoT record revenue but Q4 -20.4%; NEV tax, subsidy cuts loom.
1. Brokerages like CMB International and BofA Securities cut price targets on Xiaomi's stock to HK$44.47 from HK$47.16 and HK$40 from HK$45, respectively, despite record 2025 results, due to concerns over smartphone and EV growth amid rising memory costs and NEV policy changes [para. 1][para. 2].
2. Xiaomi's stock halved from HK$61.45 in June 2025 to HK$33 on March 27, 2026, dropping market cap below HK$1 trillion; a 4.8 billion yuan buyback with over 30 repurchases failed to stop the decline [para. 3].
3. In 2025, Xiaomi achieved revenue of 457.3 billion yuan (up 25% YoY), adjusted net profit of 39.2 billion yuan (up 43.8%), and gross margin of 22.3% (from 20.9%); however, Q4 smartphone/AIoT revenue fell 13.7% to 79.7 billion yuan, net profit dropped 23.7%, and segment margin hit 8.3% [para. 4].
4. Smartphone profitability squeezed by DRAM prices surging >75% YoY in Q4 2025, continuing into 2026; memory now 30-40% of BOM (from 10-15%), projected to 50% [para. 6].
5. TrendForce forecasts 10% drop in global smartphone production to 1.1 billion units, hitting low-end hardest; Xiaomi's premium (>3,000 yuan) models at 27.1% of China sales, but <1,100 yuan models ~60% per Jefferies [para. 7].
6. Xiaomi faces price hike dilemma as rivals (OPPO, Vivo, Honor) raised by 200-500 yuan since March; President Lu Weibing said increases inevitable but delayed to protect consumers, prioritizing share and scale [para. 8].
7. EV segment became key growth driver, >30% of Q4 revenue, 106.1 billion yuan revenue (up 223.8%, highest growth), 900 million yuan operating profit; profitable in 2 years vs. 4-7 for XPeng, Nio, etc. [para. 10].
8. 2025 deliveries: 411,100 vehicles (up 200.4% YoY), led by SU7 (top >200,000 yuan sedan); avg price up 7.1% to 250,000 yuan, margin 24.3%; 2026 target 550,000 [para. 11].
9. Revamped SU7 launched March 19 with upgrades; CFO Alain Lam cited 15,000 orders in 34 minutes, outperforming first gen, but sentiment mixed on momentum [para. 12].
10. 2026 EV headwinds: 5% NEV purchase tax, trade-in subsidies now price-based (unfriendly to low-end) vs. flat-rate [para. 13].
11. IoT/lifestyle segment: record 123.2 billion yuan revenue (up 18.3%), margin 23.1% from premium shift and H1 subsidies [para. 15].
12. Q4 IoT revenue fell 20.4% to 24.6 billion yuan due to subsidy cuts; 2026 changes (fewer categories, lower caps) pose further risks [para. 16].
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- Xiaomi Corporation
- Xiaomi Corp's 2025 revenue hit 457.3B yuan (+25% YoY), adjusted net profit 39.2B yuan (+43.8%). Stock halved to HK$33 amid smartphone Q4 slump from soaring memory costs and EV policy shifts (e.g., NEV tax). EV delivered 411k units (profitable), targeting 550k in 2026. Brokerages cut targets to HK$40-44.47. (62 words)
- CMB International
- CMB International lowered its price target on Xiaomi’s shares to HK$44.47 from HK$47.16, citing rising memory prices and Beijing’s cutback on new-energy vehicle (NEV) purchase tax breaks as headwinds.
- BofA Securities
- BofA Securities cut its price target on Xiaomi Corp’s shares to HK$40 from HK$45, citing headwinds like rising memory prices and reduced tax breaks for new-energy vehicles. (28 words)
- TrendForce
- TrendForce reports DRAM contract prices surged over 75% YoY in Q4 2025, continuing into 2026. Memory costs now comprise 30-40% of smartphone BOM (up from 10-15%, projected to 50%). This will shrink global smartphone production by ~10% to 1.1 billion units, impacting low-end models hardest.
- OPPO
- OPPO, a domestic rival of Xiaomi, has hiked prices by 200-500 yuan on certain smartphone models since March amid soaring component costs.
- vivo
- Vivo, a domestic rival of Xiaomi, has hiked prices by 200-500 yuan on certain smartphone models since March amid rising component costs.
- Honor
- Honor, a domestic rival of Xiaomi, has hiked prices by 200-500 yuan on certain smartphone models since March amid soaring component costs.
- Jefferies
- A previous Jefferies report estimated that smartphones priced under 1,100 yuan make up nearly 60% of Xiaomi’s total sales.
- XPeng
- XPeng took 4-7 years to achieve EV profitability, outpaced by Xiaomi's 2 years after first delivery.
- NIO
- Xiaomi's EV business turned profitable in two years after first delivery, outpacing Nio, XPeng, Li Auto, and Leapmotor, which took 4-7 years.
- Li Auto
- Li Auto took 4-7 years to achieve EV profitability, slower than Xiaomi's 2 years after first delivery.
- Leapmotor
- Leapmotor, an EV competitor to Xiaomi, took four to seven years to achieve profitability in its electric vehicle business, outpaced by Xiaomi's two-year milestone.
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