Most mobile providers buy Qualcomm or MediaTek processors, but Xiaomi may join the growing trend of companies that design and manufacture their own processors.
Along with Samsung, Huawei and Apple, Xiaomi plans to design its own processors in 2016. It already hired Qualcomm China’s ex-President Wang Xiang and has been picking up all the ARM licenses necessary to make its own processors.
Designing the processors in-house and potentially manufacturing them in China would lower the cost of Xiaomi’s future devices. Processor units tend to cost between £40 and £70, with the Snapdragon 810 costing over £70 per unit.
Even though it is a smart move for large companies, it may be risky for Xiaomi considering it is still a startup with a lack of strong profit. Apple does not even manufacture its own processors, preferring Foxconn do the hard lifting.
Xiaomi already runs a thin line on the mobile price to fight against Huawei, Lenovo and Apple. Some of the highest-end models from the Shenzhen-based company cost £200 less than an iPhone 6 or Galaxy S6.
Designing processors is not the most exciting part of Xiaomi’s next 12 months however, with plans to launch in Europe and America by the end of 2016. This will be the biggest test for the startup, currently valued at £30 billion, to beat Apple in its home market.
The company also faces pressure from a new Chinese mobile maker, OnePlus. Even though OnePlus has made its mark in Europe and the US instead of China, a recent 30,000 OnePlus 2 flash sale in China ended in 68 seconds.