Xiaomi Launches First Self-Developed Chip as Company Battles Multiple Business Challenges

Xiaomi Unveils First In-House Chip Amid Market Turbulence

BEIJING — Today CEO Lei Jun's announcement of the company's first independently developed smartphone chip, Xuanjie 01 (XRING 01), represents more than just another product launch. It marks a watershed moment for China's technological ambitions and Xiaomi's bid for self-sufficiency in an increasingly fractured global tech landscape.

"Xiaomi's independently developed and designed smartphone SoC chip is named Xuanjie 01 and is set to launch in late May," Lei Jun announced via Chinese social media Weibo. The understated message belies the monumental effort behind creating a chip that could reshape Xiaomi's trajectory amid significant business headwinds.

Silicon Independence in a Fragmented World

The Xuanjie 01 represents Xiaomi's second attempt at chip sovereignty. Its first venture in 2017, the Surge S1, faltered due to the limitations of the 28nm manufacturing process and baseband technology challenges. This time, the stakes—and the technology—have advanced considerably.

"This is not just about having their logo on a chip," explained a semiconductor industry analyst who requested anonymity due to business relationships with multiple smartphone vendors. "Xiaomi is building the cornerstone for long-term technological independence in an era where supply chains have become geopolitical weapons."

The new chip, manufactured using Taiwan Semiconductor Manufacturing Company's advanced N4P process node, features a sophisticated tri-cluster CPU architecture: a powerful Cortex-X925 ultra-core running at 3.2GHz, three Cortex-A725 performance cores at 2.5GHz, and four Cortex-A55 efficiency cores operating at 2.0GHz. For graphics, it employs an Imagination DXT72-2304 GPU running at 1.3GHz.

These specifications position the chip near the performance level of Qualcomm's Snapdragon 8 Gen 2—not cutting-edge but firmly within flagship territory. However, industry experts note a crucial limitation: the chip lacks an integrated 5G modem, requiring Xiaomi to rely on Qualcomm's external baseband technology for network connectivity.

"They've taken an 'architecture first, process later' approach," noted a Beijing-based tech industry consultant. "It's strategically sound for a company building these capabilities essentially from scratch."

A Corporate Lifeline During Unprecedented Challenges

The timing of this technological milestone coincides with what Lei Jun recently described as "the most difficult period since founding Xiaomi." The company faces simultaneous crises across multiple business divisions.

Xiaomi's electric vehicle division is weathering a severe trust crisis following a significant accident involving its SU7 sedan and controversy surrounding design claims about the SU7 Ultra model's carbon fiber hood. Insurance registration data reveals that vehicle sales have declined for three consecutive weeks, dropping from 7,200 to 5,200 units between mid-April and early May.

Meanwhile, Xiaomi's core smartphone business has suffered a dramatic reversal in India, one of its most important international markets. The company has fallen out of India's top five smartphone vendors for the first time since 2016, with shipments plunging 42% year-on-year in Q1 2025.

"The Xuanjie chip isn't a silver bullet for these problems," said a technology investment analyst from a major Shanghai brokerage. "But it does demonstrate that amid these challenges, Xiaomi is still executing on its long-term strategic vision rather than merely firefighting."

The Xiaomi 15S Pro: A Technological Statement

The first device to feature the new chip will be the Xiaomi 15S Pro, expected to be limited to the Chinese market. According to supply chain sources, the phone will showcase premium specifications including a 2K full-depth curved display, a Leica-certified triple camera system, and a massive 6000mAh+ battery.

A senior engineer at a competing smartphone manufacturer, speaking on condition of anonymity, expressed qualified admiration: "To design a chip that can power a flagship device on your first serious attempt is impressive. The real challenge will be whether they can maintain performance while managing thermal constraints and power efficiency."

Geopolitical Crosscurrents

Xiaomi's chip development unfolds against a backdrop of intensifying technological competition between the United States and China. While the company has allocated approximately 30 billion yuan ($4.1 billion) toward research and development of key technologies including chip design in 2025, significant hurdles remain.

The company must navigate complex semiconductor export controls. TSMC faces growing pressure from U.S. authorities regarding advanced chip shipments to Chinese customers, while domestic alternatives like Semiconductor Manufacturing International Corp operate under restrictions on importing advanced chipmaking equipment.

"What we're witnessing is the beginning of parallel technology ecosystems," observed a veteran semiconductor policy researcher from a Beijing university. "Western and Eastern supply chains are diverging, and companies like Xiaomi are positioning themselves for this new reality."

Strategic Value Beyond Immediate Returns

For investors and industry watchers, the Xuanjie 01 represents what financial analysts call a "real option" on China's technological sovereignty. While the immediate financial impact may be modest—an estimated 80 basis point improvement in gross margins under baseline scenarios—the strategic implications are profound.

By 2026, rumors suggest Xiaomi aims to begin mass production of more advanced 3nm chips while simultaneously developing on-device AI large model capabilities. If realized, this could create a unified software ecosystem spanning Xiaomi's smartphones, electric vehicles, and smart home products.

"This is about negotiating leverage as much as it is about technology," explained a semiconductor procurement specialist. "Even with limited production, having in-house chip capability significantly strengthens Xiaomi's position when negotiating with suppliers like Qualcomm."

An Industry Inflection Point

As China pursues technological self-sufficiency amid global supply chain uncertainties, Xiaomi's chip development signifies a broader industrial turning point. The company appears to be laying groundwork for potential expansion of its semiconductor efforts, possibly including licensing its technology to third-party IoT vendors by 2027.

While challenges abound—from manufacturing yields to export controls to the company's simultaneous crises in its smartphone and electric vehicle divisions—the Xuanjie 01 demonstrates China's determination to reduce dependence on foreign semiconductor technology.

For Lei Jun and Xiaomi, the chip represents a crucial step toward technological autonomy in an increasingly fragmented global landscape. Whether this gambit succeeds depends not only on technical execution but also on geopolitical winds that continue to reshape the global technology industry.