Xiaomi, one of China's rising smartphone titans, plans to steal the limelight not in smartphones but in the mobile application processor (APU) chip business by developing its own APUs for use in budget smartphones.

"Xiaomi plans to release its in-house Rifle-dubbed mobile APUs at a company event, which has been set to take place May," an official at Xiaomi's component partner said, Monday.

The Xiaomi APUs will be manufactured using a standard core license technology from ARM, a British-based intellectual property firm, the official added.

Unlike memory chips, which are being used to read and write data inside computing devices, APU chips are important as they are considered the "brain" powering computing devices, making them more profitable than conventional memory chips.

Further specifications about the upcoming Xiaomi APUs will be revealed later in an official announcement, the official said.

Such moves by the rising Chinese smartphone producer come as the smartphone industry landscape evolves, refocusing on budget handsets but with improved hardware and software.

This means, according to stock market analysts covering the mobile industry, that demand for affordable APUs will further rise and remain solid over the coming years.

But simultaneously, the release of Xiaomi APUs could pose a threat to Qualcomm and Samsung Electronics, as they are counting on the growing APU market in China, the world's single biggest smartphone market.

"As a new order has prevailed in the smartphone market, Xiaomi plans to take on Qualcomm and Samsung in mobile processor chips. Xiaomi's attempts to diversify its revenue channels beyond handsets will burden Qualcomm, greatly, and I think the situation will be different for Samsung," said a local fund manager who invested "millions of dollars" in Samsung Group's technology affiliates.

The Xiaomi APUs are expected to be added to its smartphone, tablet and TV lineup as part of its strategy to cut the firm's reliance on Qualcomm, Samsung and Taiwan's MediaTek.

Xiaomi's plan to join the APU industry added the number of smartphone manufacturers running their own APUs to five out of the "top six" smartphone leaders.

Samsung Electronics, the world's biggest smartphone firm in market share in the first quarter of this year, has been fabricating its Exynos-branded APUs, followed by Apple with its A-series. The world's no.3 phone producer Huawei Technologies operates its Kirin-branded APUs and the world's no.6 LG Electronics also plans to unveil its own APUs.

The officials said Qualcomm's recent agreement to cut the amount of royalties that it annually collects from Chinese handset manufacturers further motivated Xiaomi to accelerate their efforts to cut costs in APU sourcing with its own processor chips.

Qualcomm sells more smartphone chips than any other manufacturer, but earns the majority of its profits from patent royalties paid by handset makers that use its chips. Beijing has imposed heavy restrictions on the San Diego-based mobile chipset titan.

"It's tough to cut Qualcomm reliance, immediately, given Qualcomm's longtime leadership in the processor chip market," the official said.

"However, Qualcomm's leadership in processors will be challenged especially in the budget handset business, resulting in Qualcomm feeling more pressure to cut its royalty rates to keep its licensing business running."

By: DocMemory
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