"Xiaomi Chip Development Journey a 'Thorny Path'... Uncertain if It Can Catch Up with Apple and Samsung" [Taiwan Chip News]

Xiaomi Achieves China's First 3nm Mobile AP Development
"Nation Behind Risky Development Effort," Experts Say
Concerns Over Partner Rift and US Government Reaction

Xiaomi has attracted industry attention as news spread that it has successfully developed China's first 3nm (1nm = one billionth of a meter) process mobile application processor (AP).

[Image source=Reuters Yonhap News]

Semiconductor industry insiders believe that Xiaomi's move to develop its own chip is related to China's semiconductor industry promotion policies and the need to secure core technologies. However, this could cause dissatisfaction within the existing supply chain and potentially provoke the U.S. government, leading to predictions that Xiaomi's path to self-developed chips will be fraught with difficulties. Currently, the most successful case of in-house chip development among smartphone manufacturers is Apple. However, Apple achieved this after more than 10 years of consistent research and development investment. Oppo, Vivo, and even Samsung choose to purchase a significant portion of their processors from overseas companies.

High-Risk In-House Chip Development May Be Driven by National Mission

Industry insiders view developing a mobile AP independently as a time-consuming process requiring massive manpower and financial investment, with a high risk that the final chip may not meet market expectations. For these reasons, most smartphone companies prefer to purchase processors externally and avoid the risks and costs of maintaining a separate chip development team.

Xiaomi's decision to go against this trend and pursue in-house chip development has been met with considerable surprise. Industry insiders note that after Huawei faced U.S. sanctions, China's smartphone chip development has still been delayed. Although Huawei developed the Kirin series chips, the lack of advanced process support from TSMC has made it difficult for their performance to catch up with Qualcomm or MediaTek. Furthermore, since Xiaomi has not been subject to U.S. sanctions, it is believed to have taken on a national mission to restore the honor of China's chip industry in place of Huawei.

Purchasing processors externally means relying on other companies for core technologies. Especially in the current geopolitical climate, the core technologies of smartphone processors are dominated by U.S.-based Qualcomm and Taiwan-based MediaTek. If Xiaomi wants to break through this, it must develop smartphone chips independently.

From a commercial perspective, industry insiders believe that it is clearly not rational for Xiaomi, which emphasizes cost-effectiveness, to develop chips independently. However, if it must fulfill a national mission, in-house chip development is likely an unavoidable choice. The dominant view in the industry is that only time will tell whether Xiaomi can catch up to Apple and Samsung's market positions through its self-developed chips.

"The Effect of In-House Chip Development Will Only Be Known Over Time"

Recently, Xiaomi has rapidly grown by targeting the global smartphone market with excellent product design and marketing strategies. Based on shipment volume, Xiaomi currently ranks as the world's third-largest smartphone manufacturer, following Samsung and Apple.

According to market research firm IDC, Samsung maintained its lead by ranking first in global smartphone shipments in the third quarter of this year. Samsung shipped approximately 57.8 million units, capturing an 18.3% market share. Apple closely followed with 56 million units shipped, holding a 17.7% share and ranking second. Xiaomi shipped 42.8 million units, ranking third with a 13.6% market share.

Industry insiders analyze that Xiaomi's continuous growth in shipment volume and market share is possible because of its diverse smartphone lineup across various price ranges. It has secured a clear market positioning, and its cost-effectiveness combined with minimalist design style has resonated well with young consumers.

However, if Xiaomi moves forward with in-house chip development, while it may secure core technologies independently, it is expected to influence future product direction and market response. There is also a possibility of cracks forming in relationships with past supply partners MediaTek and Qualcomm, and further, it could provoke the U.S. government. The industry predicts that whether this will lead to positive or negative product development outcomes will only be known over time.

Taiwan Economic Daily News ? Reporter Chen Yushang / Translation by Asia Economy

※ This article is reprinted based on a strategic partnership between this publication and Taiwan Economic Daily News.