Xiaomi develops its own AI mobile chip in challenge to Qualcomm, MediaTek

By Gao Yuan

 

Xiaomi Corp. launched a mobile processor for its marquee devices, putting pressure on Qualcomm Inc. and MediaTek Inc., which for years supplied the key component to the Chinese company.

 

The Xring O3 system-on-a-chip advances Xiaomi’s in-house semiconductor design efforts with more power-efficient image processing and better artificial intelligence capabilities, the Beijing-based company said in a post on Chinese social media platform Weibo on Monday. 

 

Xiaomi’s new silicon is made using a 3-nanometer fabrication process, according to a WeChat post by founder Lei Jun. That’s closer to the node used for Apple Inc.’s most recent A19 Pro chips and well ahead of its biggest home rival Huawei Technologies Co.’s in-house designs. Xiaomi has contracted Taiwan Semiconductor Manufacturing Co. to manufacture the chips, Reuters reported. 

 

What Bloomberg Intelligence Says 

Xiaomi’s latest Xring O3 mobile processor stays at 3-nanometer even as leading rivals move to 2nm, which indicates it’s placing more weight on architecture and feature upgrades to drive gains. Redesigned compute, faster memory and stronger on-device AI should help sharpen Xiaomi’s flagship phones’ differentiation, while Xring chips across more devices will help maximize R&D efficiency. Still, limited chip volume suggests Xiaomi will remain heavily reliant on Qualcomm and MediaTek.

 

- Steven Tseng and Rebecca Wang, analysts

 

San Diego, California-based Qualcomm and Taiwan’s MediaTek have long provided Xiaomi’s key processors. The Chinese company, which also designs and produces electric vehicles, is building on years of its own research on semiconductors to lower reliance on foreign chips. Having an in-house chip for its flagship products would strengthen Xiaomi’s bargaining position with suppliers and boost its consumer appeal in a fiercely competitive market.

 

Rival Huawei uses self-developed Kirin processors in its premium phones after a series of US restrictions cut it off from key global suppliers including Qualcomm. In contrast, Xiaomi isn’t subject to sanctions preventing it from contracting with international suppliers.

 

Once China’s No. 1 smartphone maker, Xiaomi is grappling with lackluster demand for both its handset and electric-vehicle businesses as countrywide consumption levels stagnate.

 

In smartphones, the company suffered the heaviest shipment decline among major hardware makers in the June quarter, according to Counterpoint Research. Investors are also concerned that aggressive pricing for its latest sport utility vehicles could further squeeze margins.