Xiaomi stock slips to H$25.82 as smartphone share erodes to 11%

Xiaomi's smartphone market share slipped to 11% in the second quarter as Samsung and Apple captured a combined 42% of a global market that shrank 4% year over year, according to Omdia.

"The memory crisis has created severe market polarization, reflecting stark differences in vendors' ability to absorb rising component costs," Omdia said in its July 13 report. Counterpoint Research separately estimated global shipments fell 11% in the period, the weakest second quarter since 2013.

Samsung held 22% market share, up 2 percentage points from a year earlier, helped by resilient premium demand and the delayed Galaxy S26 launch pushing volume into the quarter. Apple delivered its best second-quarter performance ever at 20% share, up 4 points, as the iPhone 17 series drove one of the strongest upgrade cycles in the company's history. Xiaomi defended third place at 11%, while OPPO held fourth at 10% and vivo rounded out the top five at 8%.

The divergence reflects a memory supply crunch driven by AI infrastructure demand. DRAM and NAND now account for roughly 60% of the bill of materials for smartphones priced below $400, according to Omdia, leaving budget-focused vendors like Xiaomi with less margin to absorb cost increases than Apple and Samsung, which command higher average selling prices.

Memory Costs Reshape Competitive Dynamics

The global smartphone market's contraction masks a deeper structural shift. Memory suppliers have reallocated production toward higher-margin AI chips, reducing supply of DRAM and NAND for mobile devices and pushing up component costs. Xiaomi, which built its growth on affordable devices, faces particular pressure as the budget segment contracts. Omdia estimates smartphones priced below $400 will decline 22% as memory costs soar.

Apple and Samsung have bucked the trend through different strategies. Samsung gained ground in the budget segment as Chinese rivals reduced product lines and increased sell-in prices, while Apple benefited from stable pricing as competitors raised prices. However, Apple raised prices across other products late in the quarter, raising questions about whether iPhones could face similar hikes later this year.

Stock Market Reaction

Xiaomi shares fell to H$25.82 in Hong Kong, down from a monthly high of H$26.70, as investors priced in the competitive pressure. The stock's decline reflects concern that Xiaomi's core strategy of competing on price faces structural headwinds as memory costs remain elevated. Samsung and Apple, with their premium positioning and supply chain leverage, are better insulated from the component cost squeeze.

The memory crunch may not ease soon. Even if consumer demand stabilizes, smartphone manufacturers may continue to face higher production costs as memory production remains increasingly influenced by AI computing demand, which offers significantly higher profitability for chipmakers.

This article is for informational purposes only and does not constitute investment advice.