It is no secret that the Chinese smartphone market has started to stagnate in terms of growth. Slowing demand, increasing costs, and relentless competition makes it all the more difficult for Chinese domestic OEMs to survive with razor thin profit margins.
Xiaomi’s story resonates with this general trend. The company was leading China in smartphones sold in 2015, but has recently slipped down to fifth place behind other OEMs like Oppo, Huawei, Vivo, and Apple. So it comes as no surprise that the OEM is looking at different areas to maintain and grow its advantage.
As reported by The Wall Street Journal, Xiaomi is planning to introduce a phone powered by a custom made microprocessor. The company plans to release its ‘Pinecone’ SoC within a month, making it the second smartphone OEM from China after Huawei to produce smartphones with its own processors. This report builds upon previous leaks and rumors regarding Xiaomi featuring its own SoC in its rumored ‘Meri’ smartphone.
The report mentions that developments on the new processor have been closely guarded. A new Xiaomi-linked private entity by the name of Beijing Pinecone Electronics paid 103 Million CNY ($15 Million) to acquire mobile processor technology from Chinese state-backed Datang Telecom’s subsidiary, Leadcore Technology Ltd. The two companies, Beijing Pinecone Electronics and Leadcore Technology, planned to jointly design mobile chips.
The new homegrown chip and related technology could help protect the OEM from supply chain disruptions. Recent increased demand of the Qualcomm Snapdragon 835 from Samsung has left Qualcomm unable to supply enough stocks for other OEMs’ need. This has forced OEMs such as LG to plan a release for its 2017 flagship with the Qualcomm Snapdragon 821 instead. Xiaomi relies on Qualcomm SoCs for its premium category smartphones, while its budget devices pack a MediaTek SoC for the domestic market.
Having its own SoC also works in favor of Xiaomi in India. Patent disputes force Xiaomi to use Qualcomm powered devices across all price points in the country. India is Xiaomi’s most important overseas market, gaining higher importance on account of stagnation of the Chinese market.
Designing its own SoC will also help Xiaomi better integrate and optimize their hardware and software experiences. What remains unknown is how these in-house SoCs will perform against flagship SoCs from competitors like Apple, Samsung, and Huawei. It also puts into question how developer friendly these devices would be, if at all.
What are your thoughts on Xiaomi opting for its own in-house SoC? Do we need more diversity and competition in the mobile SoC sector? Let us know in the comments below!