Higher memory prices and intense smartphone competition weighed on Xiaomi’s first-quarter earnings, dragging its shares lower.
Xiaomi Corp shares slipped on Wednesday after the Chinese electronics maker reported weaker first-quarter earnings, pressured largely by rising memory chip costs that weighed on its smartphone business.
The company said higher prices for memory components increased pressure on margins at a time when competition in China’s smartphone market is intensifying. Rivals including Apple Inc. and Huawei continued to challenge Xiaomi in its home market, adding further strain to its core mobile business.
Although Xiaomi’s electric vehicle division posted solid sales growth, aggressive spending on EV development and artificial intelligence also impacted overall profitability. The company has been investing heavily in new growth areas as it looks to reduce dependence on smartphones and consumer electronics.
Xiaomi also indicated that pressure from memory chip prices is unlikely to ease soon, citing strong demand from the AI sector that continues to tighten supply. To counter rising costs and tougher domestic competition, the company plans to further expand its presence in overseas markets.
Following the earnings report, Xiaomi shares declined in Hong Kong trading, weighing on the broader Hang Seng index.
