China's Xiaomi to invest nearly US$7 billion in chips

Xiaomi will launch the company's self-designed mobile chip, XRING O1, built on a second-generation 3 nm process that rivals the global cutting edge and far surpasses expectations, on Thursday, founder Lei Jun announced on Monday.

Xiaomi, which sells goods from smartphones to vacuum cleaners and EVs, is one of China's most prominent consumer electronics firms. The breakthrough makes Xiaomi the fourth handset maker – after Apple, Samsung, and Huawei – to master in-house SoC design.

Writing on social media platform Weibo to mark the 15th year since the company's establishment, Lei Jun said the company will invest 50 billion yuan (US$6.9 billion) in developing high-end smartphone chips.

"Chips are the underlying core track for Xiaomi to break through in cutting-edge technology, so we will definitely make an all-out effort," Lei said.

In pursuit of Xiaomi's semiconductor ambitions, the firm has developed an investment plan involving "at least 10 years of investment and at least 50 billion yuan," Lei added.

Xiaomi took initial steps into semiconductors for smartphones with the launch of the firm's first in-house chip – the Surge S1 – in 2017.

But the group was forced to halt production of the chip due to technical and financial obstacles, and has since refocused on other components as well as a move into the electric vehicle sector.

"That is not our 'dark history.' That is the path we have traveled," wrote Lei on Monday.

Since 2021, Xiaomi's chip development program has already received 13.5 billion yuan in research and development funds for a team of more than 2,500 employees, said the billionaire entrepreneur.

"Xiaomi has always had a 'chip dream'," Lei wrote, adding: "I earnestly request everyone to give us more time and patience to support our continued exploration on this road."

In a separate Weibo post, Xiaomi will also launch its highly-anticipated YU7 electric sports utility vehicle on Thursday.

Analysts have touted the YU7 as a challenger to Tesla's best-selling Model Y in China, the world's largest auto market.

Xiaomi began manufacturing EVs last year with the launch of the SU7 sedan. Since December, the SU7 sedan has outsold Tesla's Model 3 on a monthly basis.