Xiaomi Raises Smartphone Shipment Goal, Betting on Lower Memory Costs: Report

Chinese electronics giant Xiaomi Corp. (HK:1810) has reportedly increased its annual smartphone shipment target by over 22%, betting on a potential reversal in the soaring costs of memory components. The company now aims to ship 110 million units, up from a previous goal of 90 million, according to a Tuesday report from China’s Jiemian News.

Target Revision Signals Shifting Outlook

The revised target, which Jiemian News attributed to unnamed industry sources, marks a significant change in strategy for the smartphone maker. Xiaomi had previously lowered its shipment forecast earlier in the year, citing headwinds from escalating memory chip prices that have pressured margins across the industry.

The new, more optimistic target is reportedly based on an internal company assessment that the current price surge in the memory market is unsustainable and poised to reverse. This suggests the company sees an opportunity to expand its market share as component cost pressures potentially ease.

Context: Memory Market Headwinds

The smartphone industry has been grappling with significant cost pressures as the price of essential components, particularly memory chips, has climbed. A primary driver of the price increases has been the voracious demand from the artificial intelligence (AI) sector, which has absorbed a large portion of the available supply.

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Key players, including competitors like Apple and Huawei, have previously flagged the impact of these rising costs on their operations. The report indicates that resistance to further price hikes is growing, with Jiemian News noting that manufacturers OPPO and Vivo have both rejected Samsung’s proposed memory quotation for the third quarter.

Implications for Investors

For investors, Xiaomi's upwardly revised target could be interpreted as a bullish signal for its sales volume and revenue outlook. A potential peak and subsequent decline in memory costs would provide a significant tailwind for the profitability and gross margins of all smartphone manufacturers.

This development may also indicate a broader cooling in a key segment of the semiconductor market, which has been a major focus for market participants. The pushback from major device makers could signal a shift in pricing power away from memory suppliers if demand from the smartphone sector softens or resists current price levels.