Xiaomi to spend $7 billion on developing its own chip over a decade

By Debby Wu

 

Xiaomi Corp. is planning to invest at least 50 billion yuan ($6.9 billion) in developing its own mobile processor over a decade to grow its semiconductor clout, as major tech companies increasingly treat chip knowhow as strategically important. 

“Chips are a peak we need to climb and a hard battle we cannot escape if we want to become a great hard tech company,” Xiaomi’s billionaire co-founder Lei Jun said in a post on China’s X-like Weibo on Monday. The Chinese company is set to unveil its first self-designed processor Xring O1, on May 22, Lei added in a separate post. 

 

The Beijing-based smartphone and EV maker in 2021 decided on the decade-long initiative to create the Xring mobile chip, according to Lei. 

 

Xiaomi has spent more than 13.5 billion yuan over the past four plus years and plans to invest 6 billion yuan in research and development this year, Lei added. Xiaomi now has more than 2,500 people in its semiconductor team, Lei wrote. 

 

Xring O1 is made with second-generation 3-nanometer technology, Lei said, without naming the contract chipmaker Xiaomi is relying on for production. The use of 3nm excludes China’s leading foundry, Semiconductor Manufacturing International Corp., which is stuck at the more mature 7nm due to US export controls. 

 

Xiaomi has to date depended on Qualcomm Inc. and MediaTek Inc. for mobile processors, but now the Chinese company appears to be emulating the approach of Apple Inc., one of its biggest competitors in China. 

 

Apple designs its own chips in sync with its software in order to create a complementary system. The US company recently expanded that arrangement to its Macs, to optimize the efficiency of its gadgets.

 

The new 3nm processor may give Xiaomi an edge at home over Huawei Technologies Co. which is unable to secure mobile chips more advanced than 7nm due to production partner SMIC’s struggle. 

 

Lei’s hefty investment on chips aligns with Chinese President Xi Jinping’s priorities for China to match and even surpass the US in cutting-edge tech including semiconductors.

 

Meanwhile, Xiaomi has been seeking new growth drivers beyond its traditional smartphone business. It has also bet significantly on electric vehicles but its automotive ambitions have taken a hit after a fatal highway accident involving its SU7 sedan earlier this year.