SUMMARY

Xiaomi has unveiled its new in-house Xring O3 smartphone processor as the Chinese company pushes to gain greater control over key components and reduce its reliance on Qualcomm and MediaTek. Sources say Taiwan Semiconductor Manufacturing Co. will produce the chip using a 3-nanometre process, with the processor expected to power an upcoming Xiaomi flagship foldable phone.

Xiaomi Expands Its In-House Chip Strategy

Xiaomi has unveiled a new generation of its proprietary Xring smartphone processor, marking another step in the company's effort to take greater control of the technology inside its devices.

The new processor, called Xring O3, follows the company's first in-house smartphone chip, Xring O1, which was introduced in 2025.

The move places Xiaomi among major smartphone manufacturers developing their own processors rather than relying entirely on external suppliers such as Qualcomm and MediaTek.

TSMC to Manufacture the New Chip

Two people familiar with the matter said Taiwan Semiconductor Manufacturing Co., or TSMC, will manufacture the Xring O3 using its 3-nanometre production technology.

The sources requested anonymity because the manufacturing arrangements have not been publicly disclosed.

Xiaomi and TSMC had not immediately responded to requests for comment on the chip's manufacturer, production technology or expected supply volumes at the time of the report.

Designed for a Future Xiaomi Foldable

One of the sources said the Xring O3 is expected to power Xiaomi's upcoming flagship folding smartphone.

The source said the company has a shipment target of between 200,000 and 300,000 units for the device.

That would make the Xring O3 an important test of Xiaomi's ability to use its own silicon in higher-end products where performance, power efficiency and component integration are particularly important.

Xiaomi Wants More Control Over Its Supply Chain

The development is part of a broader effort by Xiaomi to strengthen control over the components used in its products.

Smartphone manufacturers depend on a complex network of suppliers for processors, displays, memory, cameras and other components. Developing proprietary chips gives companies greater control over hardware and software integration.

It can also reduce dependence on outside chip suppliers and give manufacturers more flexibility when designing future devices.

The Xring O1 Was the Starting Point

Xiaomi launched the Xring O1 in May 2025 as its first proprietary smartphone processor.

The company said during an earnings call last week that cumulative shipments of devices powered by the Xring O1—including smartphones, tablets and watches—had surpassed one million units.

Sources said approximately 150,000 smartphones using the Xring O1 had been sold since its launch.

The numbers suggest that Xiaomi's in-house silicon remains a relatively small part of its overall device business, but the company is gradually increasing its experience with chip design and deployment.

Why the 3-Nanometre Process Matters

The Xring O3's reported use of TSMC's 3-nanometre manufacturing technology is significant because advanced semiconductor processes can improve performance and power efficiency while allowing manufacturers to fit more transistors into a smaller area.

For a smartphone processor, those improvements can support demanding workloads such as artificial intelligence, photography, gaming and advanced multitasking.

However, the manufacturing process alone does not determine a chip's performance. Architecture, software optimisation, thermal management and manufacturing quality also play major roles.

A Challenge to Qualcomm and MediaTek

Xiaomi's growing investment in proprietary processors could create additional pressure on established smartphone chip suppliers.

Qualcomm and MediaTek currently supply processors to a large number of Android smartphone manufacturers, including Xiaomi.

If Xiaomi succeeds in developing competitive in-house chips, it could gradually reduce the amount of silicon it purchases from those companies for selected products.

That does not mean Xiaomi will immediately stop using external processors. Developing a competitive chip at scale requires enormous investment, engineering expertise and reliable manufacturing capacity.

Xiaomi Joins a Wider Industry Shift

Xiaomi's strategy reflects a broader trend among major technology companies.

Apple designs its own A-series processors, Samsung develops Exynos chips, and Huawei has continued developing its own semiconductor technology.

Building proprietary silicon allows companies to optimise processors around their own operating systems, applications and hardware products.

For Xiaomi, the Xring programme could eventually become an important part of its wider ecosystem strategy spanning smartphones, tablets, wearables, vehicles and other connected products.

AI Is Increasing the Importance of Custom Chips

Artificial intelligence is also changing the role of smartphone processors.

Modern mobile chips increasingly include dedicated processing capabilities for AI tasks, image processing and other specialised workloads.

Designing its own processor gives Xiaomi the opportunity to tailor these capabilities to its software and device ecosystem rather than relying entirely on a standard chip supplied to multiple manufacturers.

This could become increasingly important as more AI functions move directly onto smartphones.

The Bigger Test Is Scale

The launch of another Xring processor is an important technical milestone, but the bigger challenge for Xiaomi will be scaling the technology.

Designing a chip is only one part of the process. Xiaomi must also ensure consistent production, competitive performance, software support and sufficient supply for commercial devices.

The reported target of 200,000 to 300,000 units for the upcoming foldable suggests that Xiaomi may initially be taking a relatively controlled approach to deployment.

What It Means for Xiaomi

If the Xring O3 performs well in a flagship device, Xiaomi could gain valuable experience that can be applied to future generations of its processors.

Over time, a stronger in-house chip programme could give the company greater flexibility in product development and reduce some of its exposure to external semiconductor suppliers.

But Xiaomi still faces a difficult balancing act. External suppliers can provide highly competitive processors at enormous scale, while proprietary silicon requires sustained investment and engineering resources.

Conclusion

Xiaomi's launch of the Xring O3 represents a deeper commitment to developing its own smartphone processors.

With TSMC reportedly producing the chip using a 3-nanometre process and the processor expected to appear in an upcoming flagship foldable, Xiaomi is moving its in-house silicon strategy into a more demanding part of the premium smartphone market.

The company is not yet replacing external chip suppliers across its entire portfolio, but the direction is clear: Xiaomi wants greater control over the technology that powers its devices.

The real test will be whether Xring can move from a limited in-house initiative into a scalable chip platform capable of competing consistently with the processors supplied by Qualcomm and MediaTek.