Xiaomi launches new Xring chip, partners with TSMC for production, sources say

By Che Pan and Eduardo Baptista

BEIJING, Aug 24 (Reuters) - Chinese smartphone maker Xiaomi on Monday unveiled a new version of its in-house Xring handset processor, betting that greater control over key components will strengthen its supply chain and reduce reliance on external chip suppliers.

The Xring O3 comes a year after Xiaomi launched its first proprietary smartphone processor, the Xring O1, marking the latest step in the world's third-largest smartphone vendor's push to join rivals Apple, Samsung Electronics and Huawei in developing its own chips.

Smartphone processors, also known as systems-on-chip (SoC), combine computing, graphics, AI processing and imaging functions in a single component. 

TSMC will manufacture the new chip using its 3-nanometre production technology, two people familiar with the matter said.

Developing more chips in-house could give Xiaomi greater control over product features and improve its bargaining power with suppliers.

The sources declined to be identified because the plans are not public. Xiaomi and TSMC did not immediately respond to requests for comment on the chip's manufacturer, production technology or shipment targets.

One source said the chip is expected to power Xiaomi's upcoming flagship folding phone, with shipments targeted at 200,000 to 300,000 units.

Its expansion into foldable phones, a higher-priced market segment, could intensify competition with Huawei.

Huawei shipped 1.6 million foldable phones in China in the second quarter, giving it a 68% market share, followed by Honor with 13.7% and Oppo with 8.5%, according to research firm Smart Analytics Global.

DEVICE MAKERS PUSH FOR IN-HOUSE CHIPS

Xiaomi's chip push reflects a broader industry trend as device makers seek to differentiate their products and reduce dependence on suppliers such as Qualcomm and MediaTek amid intensifying competition in premium smartphones.

The Beijing-based company restarted development of large, in-house chips in 2021 and has said it plans to invest at least 50 billion yuan ($7.0 billion) over a decade in the effort.

Xiaomi said on an earnings call last week that cumulative shipments of devices powered by the Xring O1, including smartphones, tablets and watches, had surpassed 1 million units since its launch.

The sources said Xiaomi has sold about 150,000 smartphones based on the Xring O1 since its May 2025 launch.

MEMORY COSTS PUSHING UP PRICES

Smartphone makers are grappling with a global downturn in device sales as rising memory and component costs drive up prices and weigh on demand.

Xiaomi sold 65 million handsets in the first half of 2026 at an average price of 1,329 yuan ($197.74), compared with 84 million units sold at an average price of 1,141 yuan in the same period of 2025 and 83 million units at 1,123 yuan in 2024, according to data from Visible Alpha by S&P Global.

Global smartphone shipments are expected to decline 14% in 2026, according to research firm International Data Corporation.

AI MODEL AND AUTONOMOUS DRIVING CHIPS

A third source said Xiaomi had also contracted TSMC to manufacture two other Xring chips: the Xring O100, a 6-nm neural processing unit that will support Xiaomi's MiMo large language model on consumer devices, and the Xring D100, a 3-nm chip for autonomous driving.

Xiaomi has invested more than 20 billion yuan ($3 billion) in Xring chip development so far, while its semiconductor design unit has grown to more than 3,000 people from 2,500 last year, the source said.

According to Xiaomi, the O3 has already entered mass production, while the O100 and D100 have completed development and are scheduled for deployment next year.

Xiaomi's electric-vehicle business generated 23.9 billion yuan in revenue and delivered 104,199 vehicles in the second quarter.

(Reporting by Che Pan and Eduardo Baptista. Editing by Miyoung Kim, Jamie Freed and Mark Potter)