Political Headwinds from Washington Challenge Xiaomi’s Operational Momentum

While Xiaomi demonstrates significant strength in its core businesses, from premium smartphones to electric vehicles, a renewed political challenge is emerging from the United States. Republican lawmakers are pressuring the Pentagon to add the Chinese tech giant to a list of companies allegedly supporting China's military-industrial complex—an accusation the firm vehemently denies.

In a significant endorsement of its automotive quality, Xiaomi's SU7 electric vehicle has topped a key industry ranking. The China Automobile Resale Value Research Report for the first half of 2025 awarded the SU7 a one-year residual value rate of 88.91%. This figure represents the highest score among all pure electric vehicles, placing it ahead of established rivals like the Aito M9.

Such strong value retention is a powerful signal of perceived quality and brand trust in the fast-paced EV sector, where aggressive pricing strategies often depress used-car prices. The data confirms that Xiaomi has successfully established its brand credibility within the competitive Chinese automotive market.

Premium Smartphone Launch Exceeds Expectations

On the consumer electronics front, Xiaomi unveiled its high-end 17 Ultra model on December 25. The launch has outperformed internal forecasts, with pre-orders—particularly for the Leica-branded editions—coming in significantly above projections. The flagship device, equipped with the Snapdragon 8 Elite Gen 5 processor, is positioned to compete directly with Apple and Samsung in the premium segment above $1,000.

Key specifications of the new device include:
* Snapdragon 8 Elite Gen 5 chipset
* 120Hz refresh rate LTPO AMOLED display
* Redesigned camera architecture developed with Leica
* Pre-order volumes exceeding initial targets

Should investors sell immediately? Or is it worth buying Xiaomi?

The aggressive late-December launch schedule points toward a potentially robust first quarter for 2026 revenue. Xiaomi traditionally achieves higher profit margins in this high-end segment compared to its mass-market offerings.

Mounting Political Risk from U.S. Lawmakers

Despite these operational successes, the company faces a growing geopolitical overhang. U.S. legislators are urging the Department of Defense to place Xiaomi on the so-called Section 1260H list, which identifies firms accused of supporting China's military modernization.

Xiaomi issued a firm rebuttal on December 24, stating it exclusively manufactures civilian and commercial products and maintains no military affiliations. The potential listing poses a tangible long-term risk, as it could complicate the company's access to U.S. capital markets and advanced technologies. This uncertainty is already causing concern among institutional investors.

The contrast is clear: operational performance is strong, marked by a successful smartphone launch and industry-leading EV value retention. However, the political risk emanating from Washington remains a substantial headwind for the otherwise solid growth trajectory. The coming days will reveal whether the Pentagon acts on the political pressure.