Xiaomi's Surge S1 In-House Processor to Help Streamline Production, Cut Prices

Chinese smartphone firm Xiaomi Inc announced its first in-house designed chipset, named Surge S1, on Tuesday, as it works to streamline production, lower prices, and gain greater control over handset design to counter the impact of slowing sales.

The Surge S1, deployed in Xiaomi's newest smartphone, the Xiaomi Mi 5c, is the first chipset - which manages data flow - from the company's wholly-owned chip research subsidiary, Beijing Pinecone Electronics.

"We need to master the core technologies of our industry and tightly integrate the development of our hardware with our software helping us to make even better smartphones," Xiaomi Chief Executive Officer Lei Jun said in a statement.

The Xiaomi Mi 5c will retail at CNY 1,499 ($218 or roughly Rs. 14,500) from March 3.

Xiaomi was briefly the world's most valuable startup following its last round of fundraising in 2014. It has since seen sales tumble due to competition from the likes of Huawei Technologies Co Ltd and brands Vivo and Oppo.

The firm, which built its empire on budget smartphones, missed its global shipment target by 12 percent in 2015. That was followed by a slide in sales last year that saw Xiaomi drop out of China's top-five smartphone vendors.

Ecosystem
The in-house Xiaomi Surge S1 chipset is one of a number of projects which the company hopes will bring users to its ecosystem and lower costs. Other projects include smart home devices and online banking.

Xiaomi said it started developing the Surge S1 chipset just over two years ago, and that it is competitive with chipsets in the same range from market-leader Qualcomm Inc.

In the process, Xiaomi hired 200 to 300 people across three cities to work on chipset design, a person with direct knowledge of the matter told Reuters in February last year.

On Tuesday, Xiaomi said its tests showed the Surge S1 outperformed Qualcomm's Snapdragon 625, a chipset used in a wide range of smartphones including Xiaomi's Redmi series.

Intellectual property
Xiaomi's announcement comes as the government works to improve China's chipset-design capabilities through subsidies and other initiatives.

In 2014, Xiaomi's Beijing Pinecone Electronics signed an agreement to jointly design chip technology with Leadcore Technology Ltd, a chip design subsidiary of state-backed Datang Telecom Technology Co Ltd.

Xiaomi itself has been building its intellectual property since being temporarily barred from India during its period of high growth in 2014, due to a patent conflict with telecom equipment maker Ericsson over processor technology.

On Tuesday, Xiaomi said it has been granted over 3,600 patents, almost half of which are international. The figure includes the 1,500 patents bought from Microsoft Corp last year.