"The Qualcomm Challenge": What Does Xiaomi's Release of Its Own New Mobile Processor Mean?
Xiaomi has challenged Qualcomm and MediaTek, according to Bloomberg — the company has begun producing its own chip for flagship devices; previously, its processors were supplied by third-party companies / Photo: Robert Way / Shutterstock
The world's third-largest smartphone manufacturer—the Chinese company Xiaomi—has released a new version of its mobile processor for its flagship devices, "thereby challenging Qualcomm and MediaTek, which have supplied this key component to the company for years," Bloomberg reports.
Details
We’re talking about the Xring O3 system-on-a-chip. The chip is manufactured using a 3-nanometer process, according to a WeChat post by Xiaomi founder and CEO Lei Jun. This figure is close to the manufacturing standards of Apple’s latest A19 Pro chips and significantly outpaces the developments of Xiaomi’s main domestic competitor, Huawei Technologies, Bloomberg notes. The processor is being manufactured at Taiwan Semiconductor Manufacturing (TSMC) facilities, Reuters reports.
The chip is expected to be used in Xiaomi's upcoming flagship foldable smartphone, and shipments are estimated to range from 200,000 to 300,000 units, the agency reports, citing a source.
Xiaomi's new silicon chip expands the company's capabilities in the field of in-house semiconductor development and provides more energy-efficient image processing and enhanced artificial intelligence capabilities, Xiaomi announced in a post on the Chinese platform Weibo.
The Xring O3 system was released a year after the company launched its first in-house smartphone processor, the Xring O1. This is another step by Xiaomi toward catching up with its competitors—Apple, Samsung Electronics, and Huawei—which are already developing their own chips, according to Reuters.
What else is known about Xiaomi's chip manufacturing?
Xiaomi has signed a contract with Taiwan Semiconductor Manufacturing (TSMC) to manufacture Xring processors, Reuters reports, citing two sources familiar with the matter. According to another source interviewed by the agency, Xiaomi has also signed a contract with TSMC to manufacture two additional chips in the Xring lineup: the Xring O100—a 6-nanometer neural processor that will support the MiMo large language model on consumer devices—and the Xring D100—a 3-nanometer chip for autonomous driving systems.
According to a Reuters source, the company has invested more than 20 billion yuan ($3 billion) in the development of Xring processors to date. According to the agency, the O3 processor has already entered mass production, and development of the O100 and D100 chips has been completed—they are expected to be released next year.
Representatives from Xiaomi and TSMC did not respond to requests from Reuters for comment regarding the chip manufacturer, the manufacturing technology, and the target shipment volumes.
Xiaomi shares fell 4% in trading on August 24; they are down 29% year-to-date. Qualcomm shares are down more than 1% on Monday.
What Analysts Are Saying
Xiaomi’s latest mobile processor, the Xring O3, retains a 3-nanometer manufacturing process, while leading competitors are transitioning to a 2-nanometer process, according to Bloomberg Intelligence analysts Steven Zeng and Rebecca Wang. “This indicates that the company is focusing on architecture and functional improvements. Redesigned compute units, faster memory, and enhanced on-device artificial intelligence will help Xiaomi more strongly differentiate its flagship smartphones,” they noted, adding that “the integration of Xring chips into a wider range of devices will help maximize the effectiveness of research and development efforts.”
Nevertheless, analysts say that Xring's limited production capacity means Xiaomi will continue to rely heavily on Qualcomm and MediaTek.
Context
California-based Qualcomm and Taiwan-based MediaTek have long supplied key processors to Xiaomi, Bloomberg notes. The Chinese company, which also designs and manufactures electric vehicles, is drawing on its own years of research in the field of semiconductors to reduce its dependence on third-party chip suppliers. Having its own processor for flagship products will strengthen Xiaomi’s bargaining position with suppliers and increase its appeal to consumers in a competitive market, Bloomberg notes.
At the same time, Xiaomi—which once held the top spot in smartphone sales in China—is facing weak demand for both mobile phones and electric vehicles amid stagnant overall consumer spending in the country. Smartphone manufacturers are also experiencing a global decline in device sales, as rising costs of memory and components are driving up prices and reducing demand, according to Reuters. According to forecasts by the research firm International Data Corporation, global smartphone shipments will decline by 14% in 2026.
This article was AI-translated and verified by a human editor
