Chinese technology giant Xiaomi is planning a new high-end chip for its smartphones, a top executive at the company told CNBC. However, unlike rival Apple, the company will not release a new chip on a yearly basis. Xu Fei, Xiaomi’s vice president, discussed the firm’s semiconductor ambitions, saying that the company was “planning ahead” for its next-generation chip but could not promise a new system-on-chip (SoC) every year. She added, “We are a newcomer here, we need to learn and we need to plan.” Xiaomi’s focus on developing its own chips mirrors efforts by other top smartphone makers like Apple and Samsung as the firm looks to expand its global market share.
Last year, Xiaomi launched a system-on-chip called the XRing 01 for its own smartphones, which is based on a 3 nanometer manufacturing process. The company has committed to investing at least 50 billion yuan ($7 billion) over the next 10 years to develop its own chips. Xu explained that while the company shipped 1 million units of the XRing 01, it would need to produce 10 million units per chip release to break even. “So for us, we know we probably need to have ten years patience for the SoC to finally break even,” she said.
The Rationale Behind Chip Design
A custom-made SoC is a critical part of a smartphone, and designing its own chips could give Xiaomi a similar advantage to Apple’s. By having greater control over the integration between hardware and software, a company can create a better and more efficient user experience. Xiaomi has its own Android-based operating system, HyperOS, and a suite of artificial intelligence applications called HyperAI. A custom chip could help power this software more efficiently. Neil Shah, a partner at Counterpoint Research, said that a custom chip would allow Xiaomi to provide “a tightly integrated experience with HyperOS and HyperAI to its ecosystem similar to Apple or Google.” The company also sells a wide range of products, and developing an SoC for smartphones will give it the expertise to develop chips for other products, including smartwatches and electric vehicles.
Balancing In-House and External Suppliers
Xiaomi’s smartphones currently rely on a combination of chips from U.S. firm Qualcomm and Taiwanese company MediaTek. For example, the Xiaomi 17 smartphone, which was launched this week, features Qualcomm’s latest SoC. Xu said that Xiaomi will continue to use chips from its partners even as it develops its own semiconductors. “For Qualcomm, MediaTek, they are super, extremely good partners,” she said. “We will continue this path. And at the same time, we’ll select… [the] right product to try our own chipset. We are going with two solutions at the same time.”
Author’s Opinion
Xiaomi’s measured approach to chip development is a strategic, long-term bet on gaining greater control over its ecosystem. By not rushing to a yearly release cycle, Xiaomi can focus on perfecting its technology and ensuring a seamless integration with its hardware and software. This move, while costly in the short term, could eventually give the company a similar advantage to Apple’s, allowing it to differentiate its products from competitors and potentially become a major player in the high-end smartphone market. The decision to balance in-house chip development with continued partnerships with Qualcomm and MediaTek shows a pragmatic understanding of the complexities of the global semiconductor market and a desire to slowly but surely build a more self-sufficient and competitive brand.
Featured image credit: iphonedigital via Flickr
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