To Streamline Production, Cut Prices, Xiaomi Unveils In-House Chipset

As Chinese smartphone firm Xiaomi Inc works to streamline production, lower prices, and gain greater control over handset design to counter the impact of slowing sales, the Chinese firm announced its first in-house designed chipset on Tuesday.

Manufactured indigenously at the company’s wholly-owned chip research subsidiary, Beijing Pinecone Electronics, the Surge S1, which manages data flow, is the first chipset of the company that it is using and has been deployed in Xiaomi’s newest smartphone, the Mi 5c.

“We need to master the core technologies of our industry and tightly integrate the development of our hardware with our software helping us to make even better smartphones,” Xiaomi Chief Executive Officer Lei Jun said in a statement.

From March 3, the Mi 5c will retail at 1499 yuan ($218).

Following its last round of fundraising in 2014, Xiaomi was briefly the world’s most valuable startup. However due ot stiff competition from the likes of Huawei Technologies Co Ltd and brands Vivo and Oppo, the company has since seen its sale of smartphones tumble.

In 2015, the global shipment target of the company was missed by 12 percent by the firm which had built its empire on budget smartphones. And last year, the company slipped out of the list of top five smartphone vendors in China as there was a slide in sales following its bad performance the year before.

Xiaomi is aiming to bring users to its ecosystem and lower the costs of business and the company hopes that the in-house chipset would be one of a number of projects which would help achieve that aim.

The company said that the chip is competitive with chipsets in the same range from market-leader Qualcomm Inc and that it had started developing the chipset just over two years ago.

A person with direct knowledge of the matter told Reuters in February last year, that to work on chipset design, the company had hired 200 to 300 people across three cities in the process.

Qualcomm’s Snapdragon 625, a chipset used in a wide range of smartphones including Xiaomi’s Redmi series, had been outperformed by the Surge S1 in tests that were conducted by the company, Xiaomi said on Tuesday.

Through the use of subsidies and other initiatives, the Chinese government has been has trying to improve its chipset-design capabilities and Xiaomi’s announcement comes amidst such an environment at home.

An agreement with Leadcore Technology Ltd, a chip design subsidiary of state-backed Datang Telecom Technology Co Ltd, was signed by Xiaomi’s Beijing Pinecone Electronics to jointly design chip technology in 2014.

After a patent conflict with telecom equipment maker Ericsson over processor technology, Xiaomi had been temporarily barred from India during its period of high growth in 2014, and since then the company itself has been building its intellectual property.

It has been granted over 3,600 patents, almost half of which are international, the company said on Tuesday. The figure includes the 1,500 patents bought from Microsoft Corp last year.

(Adapted from Reuters)

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