Xiaomi Shares Fall - Chip Price Increases and Competition Impact Profits
Chinese tech company Xiaomi's stock fell nearly 3% on Wednesday following the company's release of weaker-than-expected first-quarter results.
The share price declined to 28.88 Hong Kong dollars, marking an almost one-month low. Xiaomi was also one of the biggest drags on the Hang Seng Index, which fell 0.9%.
The company's net profit in the first quarter declined 43% and reached 6.1 billion yuan. The main reason was the rising cost of memory chips, which particularly impacted Xiaomi's smartphone business. Additionally, the company faces intensified competition in the Chinese market, including from Apple and Huawei.
Despite Xiaomi's electric vehicle division showing strong sales, large investments and low margins put pressure on overall financial results.
The company is actively increasing investments in electric vehicles and artificial intelligence to reduce its dependence on consumer electronics alone.
Xiaomi also announced plans to expand into international markets to offset increased costs and competition in the domestic market. According to the company, pressure on memory chip prices will persist in the near term, as demand in the AI industry remains very high.
