New reports from sources knowledgable of Xiaomi’s plans indicate the smartphone manufacturer plans to design and produce their own processor chips in-house for use in their lower and mid-tier devices. Currently Xaiomi uses chips from Qualcomm and MediaTek in their smartphones.
The primary application is believed to be the Redmi Note series of devices. Currently most of Xaiomi’s lower-end devices are provided by MediaTek which supplied about 20 million chips last year to Xiaomi. Analysts expect MediaTek to suffer the most if Xiaomi is able to make this happen.
According to the sources, the move to in-house chips will start in the second half of 2016. To ramp up that quickly, sources think Xiaomi will rely on Leadcore Technology, a subsidiary of Datang Telecom, a state-backed entity. Leadcore has an agreement in place to design chips for privately owned Beijing Pinecone Electronics, which in turn is controlled by Xaiomi.
With the support of the Chinese government, smartphone manufacturers in the country are increasingly looking at producing chips in-house in order to reduce their reliance on foreign sources. Even with that support though, a smartphone manufacturer has to be large enough and sell enough units to justify the research and development costs for an in-house chip. As the world’s fifth-largest smartphone manufacturer, Xaiomi may have reached that plateau. Currently Samsung, Apple and Huawei are the only companies actually producing their own chips in house, but several other companies, like LG, which does produce their own Nuclon chip, are exploring the ability to power their smartphones with their own chips.