Of late, it's been speculated that Xiaomi is taking a big leap in the smartphone market and is all set to produce its own smartphone structure on a chip (SoC).
For the uninitiated - SoC works the same way for a smartphone as heart works for us human beings. SoC can either make or crack a device. Till now, Qualcomm and MediaTek have been the foremost SoC suppliers and their microprocessors make for the foundation for all smartphones across.
In order to develop a customized core – one has to put in a lot of effort and resources. However, if a company decides to take the risk, it certainly proves beneficial as they apparently get an edge over their competitors.
If Xiaomi makes this leap, it would even use ARM's Cortex cores. But again, the question that everyone now has is why Xiaomi is spending so much money in developing the custom core when it can actually use MediaTek's SoC? So far, Xiaomi has maintained its image of offering performance rich smartphones in mid-range. The custom core will surely be an added feature for the company but that may cause it reputation as ARM Cortex cores aren’t so good when it comes to performance.
Will Xiaomi Gain Any Profit?
When you have a SoC of your own – it certainly helps you as a smartphone manufacturer. You can twist the SoC to the precise needs of its individual devices – like Apple does. Every iPhone comes with dual core processors which offer upright performance while also checking the consumption of power.
On the other hand, third-party SoCs are designed to fit all devices which is why it never lets the device perform to the best of its capability. When Qualcomm's Snapdragon 810 came out in the market, it was turned down for overheating. And since companies like Sony, HTC and LG had no other option in regards to SoC they had to continue with Qualcomm Snapdragon 810. Bigwigs like Samsung and Apple had their custom cores which helped them in dealing with the problem effectively.
If Xiaomi has its own SoC, it would be able to create a cutthroat moat which will have its customized areas of specialty. But challenges would really be high!
Will It Be Worth The Investment?
If Xiaomi decides to make its own SoC, it would get to face tough competition from the likes of Samsung, Apple and others. Each of them has their own way of making money. Apple's outlay in custom chips is earned back from the hardware it sells. Samsung has its foundry and makes millions of devices other than smartphones which allows it to bear the expense done on custom chips.
For Xiaomi, its custom chip business model would be more or less comparable to Samsung but the latter’s products generate higher revenue. But as for Xiaomi, its software and products don’t fetch in so much of revenue.
Xiaomi earns maximum from selling smartphones, and the major percent of smartphone sales happen in China. In the current scenario where the global as well as Chinese smartphone market is facing torpidity-having a custom SoC won’t be justified.
As we discussed above, owning a custom SoC has many benefits and is highly noteworthy; as it can help make a phone standout and have an edge over its competitors. But given the challenges, a company like Xiaomi shouldn’t be focusing on this aspect. Creating a custom SoC at this point would not prove beneficial for it. It’s better that Xiaomi continues using third-party SoC’s until it readies the platform that can support its vision for custom chip.
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