In an attempt to dial down its exposure to foreign chip suppliers in the wake of heightened US-China tensions, Chinese consumer electronics giant Xiaomi has dusted off long-dormant plans to build chips in-house.
Management has signaled plans to invest 50 billion yuan (US$6.9 billion) over the next decade to develop its own semiconductors.
Xiaomi is by no means a newcomer to semiconductor development having committed 13.5 billion yuan to chip-related R&D in 2021.
However, by upping the ante, Xiaomi has become the last in a line of Chinese tech stocks like Huawei, Baidu, and Alibaba to initiate domestic chip development efforts in response to tighter Washington restrictions on high-end semiconductor exports.
Better hardware-software integration
The investment is expected to support Xiaomi’s efforts to design and manufacture high-end smartphone chips, starting with the Xring O1, a new system-on-chip (SoC) unveiled last Thursday.
SoCs integrate multiple core components including CPU, GPU, memory, and connectivity into a single chip.
By doing so manufacturers gain tighter control over hardware-software integration.
To date, the only other smartphone manufacturers to have successfully developed their own SoCs for mass-market use include Samsung, Huawei and Apple.
Xiaomi’s decision to adopt the same fabrication process used by Apple’s latest A18 Pro chips to power its next-generation smartphones and other devices, suggests Xiaomi is aiming for top-tier performance.
Having abandoned a previous SoC attempt several years ago, due to technical and financial constraints, Xiaomi has developed other semiconductor components, including imaging and battery management chips.
Technological sovereignty
Xiaomi founder and CEO Lei Jun told investors that the company’s semiconductor development plans are part of this broader national push for technological sovereignty.
“Chips are the underlying core track for Xiaomi to break through in cutting-edge technology, so we will definitely make an all-out effort,” said Lei.
“Xiaomi has always had a ‘chip dream’. I earnestly request everyone to give us more time and patience to support our continued exploration on this journey," said Lei in a final appeal to supporters.
Meantime, Xiaomi has no plans to cut ties with its current chip supplier, Qualcomm.
The company’s plans to continue using Snapdragon chips suggest that Xring O1 may supplement, rather than replace, Qualcomm’s processors, at least for now.
Analysts see Xiaomi's dual-track approach as a hedge to ultimately building long-term autonomy.
Meanwhile, the Xring O1 is expected to debut later this week alongside a suite of new Xiaomi products. These include the Xiaomi 15S Pro smartphone, a new tablet, and the highly anticipated YU7 electric SUV.
