Xiaomi Corporation’s share price has fallen sharply to become the worst-performing technology stock in China, as investors grow increasingly uncertain about its smartphone business and its bold new push into electric vehicles. The company faces mounting concerns over margin pressure in mobile devices and doubts about its ability to execute on its EV ambitions.
Smartphones squeeze margins despite scale
Xiaomi’s core strength remains its smartphone business, but elevated component costs—particularly for memory chips—are squeezing margins just as its peers strain to keep up in a saturated and competitive market. Analysts point out that rising chip costs will force Xiaomi either to absorb the extra cost or raise prices at a time when consumer demand is weak.
Electric vehicle ambitions raise fresh doubts
Although Xiaomi has committed billions to its EV arm and launched its debut model in China, the transition to vehicle manufacturing has proven tougher than expected. Delivery delays, regulatory scrutiny and a congested competitive field have increased uncertainty. Investors are questioning whether Xiaomi can scale its EV business fast enough to justify its lofty ambitions and valuations.
Strategic crossroads for Xiaomi
The combination of a margin-heavy smartphone segment and a capital-intensive EV division puts Xiaomi at a strategic inflection point. The company must decide whether to maintain aggressive scale or refocus on its more established electronics business. The path it chooses now will influence not just its financial performance but its positioning in global tech and mobility markets.
Implications
For stakeholders, Xiaomi’s stock slide signals that even market incumbents are vulnerable when multiple growth engines falter simultaneously. The smartphone supply chain could see more cost pressure ahead. For EV competitors, Xiaomi’s stumble may signal that even deep-pocketed tech brands face steep hurdles in becoming automakers. And for investors eyeing Chinese tech, the episode is a warning: diversified ambitions may dilute focus when conditions turn tough.
Source: Bloomberg
