It is highly risky for Xiaomi Technology to launch smartphones featuring in-house developed CPUs as the vendor's shipment volumes are not large enough.
Xiaomi reportedly plans to unveil its next-generation Mi 5C smartphone powered by in-house developed Pinecone V670 CPU in March at the earliest.
The strategy to develop ARM-based smartphone CPUs, as adopted by Samsung Electronics, LG Electronics and Huawei, makes sense as it will allow vendors to seek differentiation, while not being restrained by the supply and price of chip suppliers.
It is fortunate for companies like Samsung, LG and Huawei that they have all overcome the technical barriers and begun to bear fruit for their efforts, which include years of R&D developments and a large sum of expense and cultivation of talent.
However, shipment volume is also a key point. Samsung served as the top smartphone vendor globally with shipments reaching 311.4 million units in 2016. Huawei took the third spot with 139.1 million units, while LG shipped 75 million units to capture the sixth title.
Xiaomi's shipments reached a high of 70 million in 2015 compared 61.12 million a year earlier. However, shipments were down 15.6% to 61 million in 2016, according to Counterpoint. On the other hand, domestic rivals Oppo and Vivo shipped 99.4 million and 77.3 million units, respectively, in 2016.
Xiaomi is expected to ship 50-55 million smartphones in 2017, a shipment volume which is apparently insufficient to support in-house production of smartphone processors.
In addition to bearing the high cost for the development of its first CPU, Xiaomi also runs the risk of undermining its sales and brand image if the performance and stability of the Pinecone 670 is below par.
Article translated by Steve Shen
