Xiaomi just threw $321 million at its sliding stock price. The Chinese tech giant announced a HK$2.5 billion buyback program on Friday, sending shares up 2% after an 8% year-to-date decline that's got investors worried. But the repurchase - Xiaomi's latest in a series of similar moves - comes as the company faces mounting headwinds from a worsening memory chip shortage, brutal EV price wars, and disappointing delivery targets that suggest the financial engineering might be masking deeper operational struggles.
Xiaomi's stock got a Friday morning jolt, but don't mistake the 2% pop for a turnaround. The Beijing-based tech giant announced it's buying back up to HK$2.5 billion worth of shares - roughly $321 million - in what's becoming a familiar playbook for a company navigating some serious crosswinds. According to a late Thursday filing with the Hong Kong Stock Exchange, the open-market repurchase kicks off January 23 and marks yet another attempt to prop up investor confidence after shares tumbled over 8% since the start of 2026.
This isn't Xiaomi's first rodeo with buybacks. The company snapped up 4 million shares for HK$152 million just ten days earlier on January 13, part of a pattern of repurchases over recent years. But critics argue stock buybacks are just financial sleight of hand - boosting share prices without actually fixing what's broken underneath. That cash could've gone to employee compensation, factory expansion, or the kind of innovation that might address the real problems hammering the stock.
And those problems are piling up fast. A looming memory chip shortage is squeezing margins across Xiaomi's smartphone business, which still forms a core revenue pillar for the company. Dan Baker, senior equity analyst at Morningstar, says the shortage has already caused margin compression for smartphone manufacturers, with multiple industry forecasters slashing their smartphone outlook. The situation's only getting worse as chipmakers prioritize the voracious memory demands of AI applications over consumer electronics.
Ivan Lam, senior analyst at Counterpoint Research, puts it bluntly - 2026 is going to be challenging not just for Xiaomi but for Chinese original equipment manufacturers across the board. Domestic Android players remain most vulnerable to chip shortages, he notes, as memory manufacturers continue diverting capacity toward the AI boom. That leaves smartphone makers fighting over shrinking supply at rising prices, exactly the scenario that tanks gross margins.
