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Xiaomi is expanding its push into proprietary silicon with a high-end processor expected to power its next flagship foldable.
The Chinese smartphone maker unveiled the Xring O3 on Monday, roughly a year after introducing the Xring O1, its first flagship processor under the Xring program. The new chip is part of Xiaomi’s broader effort to gain more control over key components and compete more directly with Apple, Samsung Electronics and Huawei.
Two people familiar with the matter told Reuters that Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to manufacture the O3 using its 3-nanometer process. One source said the O3 is expected to power Xiaomi’s upcoming flagship foldable phone, with shipments targeted at between 200,000 and 300,000 units.
That would make the O3 a relatively small-volume product for Xiaomi. The company said last week that products using chips from its Xring lineup had passed 1 million cumulative shipments across smartphones, tablets, and watches. Sources told Reuters that only about 150,000 of those products were smartphones.
Xiaomi restarted development of large in-house chips in 2021 and has pledged to invest at least 50 billion yuan ($7 billion) over a decade. It has already invested more than 20 billion yuan in Xring development, while its semiconductor design team has grown to more than 3,000 people, according to Reuters.
The strategy could give Xiaomi greater control over how its hardware and software work together while strengthening its position when negotiating with outside chip suppliers.
The O3 is also arriving as smartphone makers face higher memory and component costs. Xiaomi sold 65 million smartphones in the first half of 2026, down from 84 million in the same period last year, while its average selling price increased, according to Visible Alpha data cited by Reuters. IDC expects global smartphone shipments to fall 14% this year.
That makes the economics of developing custom chips more complicated. Building a processor internally can offer more control over features, but leading-edge manufacturing remains expensive, especially when initial volumes are measured in hundreds of thousands rather than millions.
Foldables give Xiaomi a testing ground
Putting the O3 in a premium foldable could be a calculated move. Foldables typically command higher prices, giving Xiaomi more room to absorb the costs and risks of a new processor while testing its silicon in a flagship product.
The move also puts Xiaomi deeper into competition with Huawei. Huawei shipped 1.6 million foldables in China in the second quarter and held a 68% share of the market, according to Smart Analytics Global data cited by Reuters. Honor and Oppo followed with 13.7% and 8.5%, respectively.
The more important test for Xiaomi, however, may come after the first O3-powered phone. A few hundred thousand units would prove that Xiaomi can design and manufacture an advanced processor, but broader adoption would show whether its chip program can become a meaningful alternative to external suppliers.
Xring expands beyond smartphones
Xiaomi is not stopping with the O3. Reuters reported that TSMC is also expected to manufacture two other Xring chips: the 6nm O100 neural processing unit for Xiaomi’s MiMo large language model on consumer devices and the 3nm D100 for autonomous driving.
Xiaomi says the O3 has entered mass production, while the O100 and D100 have completed development and are scheduled for deployment next year. Their rollout will show whether Xring can grow from a limited flagship experiment into a broader silicon platform spanning Xiaomi’s phones, AI devices, and vehicles.