Xiaomi Readies Own Mobile Chip, Pressuring MediaTek and Qualcomm

Xiaomi is preparing a self-designed mobile processor for its upcoming smartphones in an effort to reduce its reliance on foreign suppliers Qualcomm. and MediaTek.

The processor may help Xiaomi be more self-sufficient and stand out in an Android market led by Qualcomm customers. Mass production of the chip designed in-house is expected to begin in 2025, according to people familiar with the matter, who asked not to be named discussing a private corporate plan. 

The 2025 timeframe underscores how Xiaomi's keen to join a growing number of tech majors investing in semiconductors, a key focus for Beijing in a broader tech race with the US. Chinese officials have also repeatedly asked local firms to reduce their reliance on overseas tech as much as possible, and Xiaomi's move is likely to help with that goal. 

For the Beijing-based company, it marks a foray into yet another cutting-edge field, in a year where Xiaomi also invested heavily in electric vehicles.

Breaking through in the smartphone chip arena is no easy task. Intel and Nvidia failed to compete effectively, as did Xiaomi's rival Oppo. Only Apple and Alphabet's Google have successfully transitioned their full range of devices to self-designed silicon — with even industry leader Samsung Electronics Co. relying heavily on Qualcomm's chips due to their better efficiency and mobile connectivity.

For Xiaomi, developing in-house chipmaking expertise can help the company's efforts toward making smarter and better connected EVs, above and beyond more competitive mobile devices. Xiaomi's move into automaking was originally motivated by the company facing sanctions by the first Trump administration, which were later revoked.

A Xiaomi spokesperson did not respond to requests for comment.

Xiaomi's nascent semiconductor work could pose a challenge for the chip manufacturer it contracts this production to, as industry leader Taiwan Semiconductor Manufacturing Co. faces escalating pressure from US authorities to curtail its business with customers from mainland China.

The Chinese smartphone maker, which counts Qualcomm as an early investor, works very closely with its US partner and has generally been content to optimize the main processor and augment it with power management and graphics enhancements.

Xiaomi will invest around CNY 30 billion ($4.1 billion or Rs. 34,570 crore) in research and development in 2025, up from CNY 24 billion this year, Chairman and Chief Executive Officer Lei Jun said last month during a live-streamed company event. The research will focus on core technologies such as artificial intelligence, operating system improvements and chips, according to Lei, who co-founded Xiaomi almost 15 years ago.

© 2024 Bloomberg LP