Chinese smartphone giant Xiaomi presented the new version of its cell phone processor, the Xring O3, developed in-house. The initiative reinforces the company’s commitment to better controlling its essential components, strengthening its supply chain and reducing dependence on external chip suppliers. The launch takes place on August 24, 2026.

The Xring O3 chip was produced using TSMC’s advanced 3-nanometer technology, according to sources familiar with the matter. Xiaomi intends to ship between 200,000 and 300,000 units of the Xring O3.

The Xring O3 is expected to be the main component of Xiaomi’s next high-end foldable cell phone, intensifying competition with Huawei in the premium device market. This movement follows an industry trend, with other major manufacturers such as Apple, Samsung and Huawei also investing in the development of their own chips.

On the same topic: Xiaomi launches Xring O3 chip and deepens partnership with TSMC in semiconductor production

In-house chip development strengthens Xiaomi’s control

The introduction of the Xring O3 comes one year after the launch of the Xring O1, Xiaomi’s first proprietary processor for smartphones. This is the latest step by the world’s third-largest smartphone maker to compete more robustly with competitors such as Apple, Samsung Electronics and Huawei in the chip segment.

Smartphone processors, known as systems on a chip (SoC), integrate several crucial functions into a single component, including computing, graphics, artificial intelligence processing and imaging. By developing more chips internally, Xiaomi seeks greater control over the characteristics of its products and improves its negotiating power with suppliers.

Sources close to the company, who preferred not to be identified, revealed that the plans are not yet public. Xiaomi and TSMC have not commented on the chip manufacturer, production technology or shipping targets.

With the expansion into the foldable phone market, a higher price segment, Xiaomi could intensify the dispute with Huawei. According to research firm Smart Analytics Global, Huawei dominated the Chinese foldable cell phone market in the second quarter, with 1.6 million units shipped and a 68% share, followed by Honor (13.7%) and Oppo (8.5%).

Device manufacturers bet on their own chips

Xiaomi’s strategy of investing in chips reflects a broader industry trend, with device makers looking to differentiate their products and reduce dependence on suppliers like Qualcomm and MediaTek. This move comes amid growing competition in the premium smartphone market.

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The Beijing-based company resumed the development of large chips in 2021 and announced plans to invest at least 50 billion yuan (about US$7 billion) over a decade in this project. In a financial earnings call, Xiaomi stated that cumulative shipments of devices equipped with the Xring O1, including smartphones, tablets and watches, have surpassed 1 million units since its launch.

Sources indicated that Xiaomi has shipped approximately 150,000 smartphones with the Xring O1 chip since its launch in May 2025.

Memory costs influence prices

Smartphone makers are facing a global slowdown in device sales, driven by rising costs of memory and other components, which are driving up final prices and impacting consumer demand.

Xiaomi sold 65 million cell phones in the first half of 2026, with an average price of 1,329 yuan (approximately US$197.74). This number contrasts with 84 million units sold at an average price of 1,141 yuan in the same period in 2025, and 83 million units at 1,123 yuan in 2024, according to data from Visible Alpha by S&P Global.

Research firm International Data Corporation projects a 14% drop in global smartphone shipments by 2026.

Artificial intelligence models and chips for autonomous driving

A third source revealed that Xiaomi has also contracted TSMC to manufacture two other chips in the Xring line: the Xring O100, a 6nm neural processing unit that will be used in Xiaomi’s MiMo language model in consumer devices, and the Xring D100, a 3nm chip aimed at autonomous driving.

Xiaomi has already contributed more than 20 billion yuan (about $3 billion) to the development of the Xring chip, and its semiconductor design unit has expanded from 2,500 to more than 3,000 employees, according to the source.

According to Xiaomi itself, the O3 is already in mass production, while the O100 and D100 have completed their development and are scheduled to be launched next year.