Xiaomi’s share price advanced about 3% in Hong Kong trading following the company’s announcement of a new, large-scale automatic share buyback program valued at up to HK$2.5 billion. The move comes as Xiaomi looks to support its stock, which has underperformed since the start of the year.
The consumer electronics conglomerate, headquartered in Beijing and active in sectors such as mobile phones and electric vehicles, revealed the buyback plan late Thursday. Under this initiative, Xiaomi will mandate an independent broker to repurchase its shares according to specific predetermined criteria.
Xiaomi’s stock rise on Friday follows a challenging period, with shares having declined over 8% since January. The company has regularly engaged in buybacks this year, committing HK$2.12 billion through near-daily transactions since early January ahead of this latest program.
There is criticism around the broader practice of stock repurchases, with detractors arguing that buybacks can lift share prices in the short term without improving underlying operational performance. Critics also contend that such capital allocation can come at the expense of employee compensation, production expansion, and innovation investment.
Xiaomi’s stock value has come under pressure due to an anticipated shortage of memory chips, which analysts expect will drive up component costs for products like smartphones. The scarcity is projected to intensify as chipmakers pivot production toward meeting higher demand from artificial intelligence applications.
Furthermore, the company’s shares have also been weighed down by negative publicity, including incidents involving its vehicles that drew considerable attention online last year. Additionally, competitive pricing in China’s electric vehicle market has exerted further margin pressure on the company and its peers.
On the automotive front, market analysts say investors reacted lukewarmly to Xiaomi’s goal of 550,000 vehicle deliveries in 2026, describing the target as underwhelming. Profitability on these sales may also be at risk next year as changes to China’s EV subsidy framework are expected to reduce margins.
Meanwhile, Xiaomi has committed to long-term technological investments, notably a new semiconductor unit. The group pledged at least CNY 50 billion over the next decade, starting last year, to advance its chipmaking capability. The company is also planning to expand its EV footprint internationally in the coming years following the introduction of its high-end SU7 Ultra electric vehicle.
