Xiaomi Inc is China’s most valuable start-up and is aiming to use smart phone processor chips designed in-house in some of its lower-priced handsets in the second half of this year, a source with direct knowledge of the matter informed Reuters. The move would mark the first time that Xiaomi has used chips designed in-house, something analysts have said could put pressure on industry leaders such as Qualcomm Inc and MediaTek Inc, which supply the company. The in-house smart phone application processor chips are designed for Xiaomi’s mid- to low-priced smart phone model Redmi Note series, but it is unclear how many Xiaomi is planning to make this year, said the source, who declined to be named because the information is not yet public.
The move comes as Beijing ploughs billions of dollars into home-grown chip companies in a bid to end China’s reliance on foreign semiconductors. The world’s fifth-largest smart phone vendor, Xiaomi has hired 200 to 300 people to work on smart phone chip design in cities including Nanjing, Shanghai and Beijing, the source said. Xiaomi is copying the model of designing processor chips in-house from Apple Inc, Samsung Electronics Co Ltd and Huawei Technologies Co Ltd, the source said, referring to the only three vendors who have the ability to put self-designed smart phone processor chips into commercial use at the moment.
Beijing-based Xiaomi declined to comment when contacted by Reuters on Friday. The chip, if designed in-house will not only add pressure on the leading chip manufacturers but also enable the company to lower the price of its devices. It then can stand a chance to capture a larger share of the market than it currently has. The move can also affect other smart phone makers like Samsung and HTC as they stand to lose out on their individual market shares.