This is an excerpt from a story delivered exclusively to Business Insider Intelligence Connectivity & Tech subscribers. To receive the full story plus other insights each morning, click here.
Chinese technology company Xiaomi has purchased a 6% stake in Shanghai-based semiconductor company VeriSilicon Holdings for an undisclosed sum, reports Reuters. Xiaomi’s investment in VeriSilicon makes it the chipmaker’s second-largest investor, putting Xiaomi in a position toguide the chipmaker’s development efforts and ensure it has a supply line for the silicon it needs.
The investment is a continuation of Xiaomi’s efforts — dating back to 2014 but more active in recent years — to augment its China-based chipmaking options while it also strives to move some semiconductor design and development in-house.
Here’s what it means: If Xiaomi can further develop its semiconductor line of business, it could gain greater control over its smartphone and smart home device development and reduce its reliance on relationships with the likes of Qualcomm.
Xiaomi has created its own custom chips in the past, but its current lineup is, like most of the mobile phone world, highly dependent upon Qualcomm and its Snapdragon chips.
In 2017, Xiaomi released a version of its flagship Mi phone that boasted an in-house system-on-a-chip (SoC) design, the Surge S1, which offered comparable performance to a contemporary midrange Qualcomm processor. Since that foray, though, the company has stuck with Qualcomm for its SoC needs, rather than going to market with additional internal designs.
Other companies in the smartphone segment have also moved SoC business in-house or to subsidiaries:
- Huawei outfits a number of variants of its flagship devices with SoCs produced by its chip design subsidiary HiSilicon. The company’s Kirin SoC chipsets allow Huawei to design smartphones more closely in line with the processing hardware that they use. They also give Huawei better leverage in negotiations with Qualcomm, as it can present a credible alternative to the San Diego-based chipmaker’s market-standard Snapdragon product line. Given Huawei’s issues with US officials and its current status on the US Department of Commerce’s entity list, establishing an alternative source for SoCs can allow for continued operations independent of the political climate.
- Apple is perhaps the paragon of in-house chip development. Since 2010, the company has used its own chips, dubbed the A-series, in its iPhones and iPads, wholly eschewing the likes of Qualcomm for SoCs and taking control of almost all of the silicon design for its key devices (the main exception being modems, which it sourced from Qualcomm, then Intel, and now Qualcomm again). Apple’s close integration of chips with hardware and software has allowed the company to create a lineup of higher-performing devices — the A12 Bionic chip outpaces the Snapdragon 855 chipset on most fronts — that offer generally better battery life than competitors’. Both Huawei and Xiaomi are looking to replicate the success Apple has found in moving to its own custom SoCs.
Interested in getting the full story? Here are two ways to get access:
- Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Connectivity & Tech briefing, plus more than 250 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
- Current subscribers can read the full briefing here.
- Apple’s rumored discontinuation of its AR glasses project would be a massive blow to the consumer AR headset market
- How to transfer all of your apps onto a new iPhone, using iCloud or the App Store
- Deutsche Telekom and Software AG are partnering to expand on their mutual IoT cloud platform