Image Source: Visual China
Written by Yaxuan Edited by Ye Jinyan
Produced by Deep Web · Tencent News Xiaoman Studio
On the evening of September 25, at 7 PM, Lei Jun held his sixth annual speech, themed “Change”, discussing the story behind Xiaomi’s Xuanjie chip and Xiaomi’s automotive ambitions.
“I know how difficult it is to develop self-researched SoCs; it is absolutely a matter of life and death,” said Lei Jun.
Xiaomi’s journey in chip development began in 2014 with Pinecone Electronics. After the setbacks with the Surge S1 and a period of silence, Xiaomi achieved a key breakthrough this May by officially launching its self-developed SoC chips, the Xuanjie O1 and the Xuanjie T1 watch chip.
In 2014, Xiaomi established Pinecone Electronics to start developing its own SoC chips. The first generation of Xiaomi’s terminal SoC was officially released in 2017, featured in the Xiaomi 5c, selling around 500,000 to 600,000 units that year.
Self-developed SoC chips require sufficient hardware shipment volumes to support them.
Lei Jun previously pointed out in a live broadcast: “The difficulty of developing large chips is far greater than the public imagines. The lifecycle is very short, with an iteration every year; by the second year, they become outdated and depreciate. Therefore, without sufficient installation volume, even the best chips are a losing business. This requires that large chips must sell over ten million units within one or two years to survive.”
“In 2018, we made a difficult decision to halt SoC chip development, and the team continued to work on smaller chips, keeping a little spark alive,” said Lei Jun.
In 2020, Xiaomi’s chip team conducted a review to analyze where Xiaomi’s self-developed chips had failed. Lei Jun concluded, “There is no opportunity for self-developed mobile SoCs in the mid to low-end market; only the high-end market offers a glimmer of hope.”
“The mobile SoC industry is very special. Our research found that both Apple and Huawei started from the high-end market, and no successful mobile company has ever begun developing self-researched chips from the low-end. This conclusion made us realize that Pinecone’s initial entry point was wrong, and the direction was incorrect,” said Lei Jun.
Furthermore, the success of chips is inseparable from the comprehensive support of the mobile business. “Imagine, why would the mobile team give up mature, stable, high-performance external chips to take risks with unproven solutions? If there is no highly consistent goal and no determination to share honor and disgrace, this cannot be accomplished. Using self-developed, still immature solutions, if the self-developed chip has issues, the entire mobile product line could be affected,” Lei Jun said.
According to Lei Jun, Pinecone Electronics was an independently registered subsidiary, relatively isolated in management, making collaboration with the mobile team very difficult, often leading to blame-shifting. I personally coordinated many times, but ultimately could not resolve it completely. Thus, Pinecone’s failure became inevitable.
In Lei Jun’s view, chips are an absolute hurdle that Xiaomi cannot avoid in its development process. Almost all top global tech giants have ultimately become chip giants. “Chips are an essential path for Xiaomi,” said Lei Jun.
At the beginning of 2021, Xiaomi restarted a new round of chip development. In 2022, due to the international economic situation and geopolitical factors, Xiaomi’s overall business faced significant challenges.
According to Xiaomi’s financial report, the total revenue of Xiaomi Group in 2022 was 280 billion yuan, a year-on-year decrease of 14.7%, with an adjusted net profit of 8.5 billion yuan, a year-on-year decrease of 61.4%.
“This is an unprecedented decline in Xiaomi’s 15-year development history, even more severe than during the most difficult periods of 2015 and 2016. Meanwhile, both the automotive and chip projects require an investment of 50 to 60 billion yuan each. This pressure is suffocating. At this time, doubts began to arise within the team: will continuing to develop chips drag the company down?” Lei Jun recalled.
At a critical moment, Lei Jun held a closed-door meeting with senior executives. “Such a major decision must be the result of consensus among all executives. Because everyone understands that this will determine Xiaomi’s future,” said Lei Jun.
Some executives candidly stated: “This calculation cannot be made clear from a business logic perspective.” One executive said: “At this point, it is no longer something that can be decided by data; it can only rely on the founder’s judgment.”
“I then asked everyone a question: if we give up now, ten years later, will we be pleased with having a few hundred billion more on our balance sheet, or will we regret that Xiaomi has forever lost its chip capabilities?” said Lei Jun.
In the end, Lei Jun decided that this investment of a few hundred billion yuan was absolutely worthwhile. “Even if we take a step back and ultimately do not succeed completely, this process will cultivate a chip development team for Xiaomi, fundamentally changing the company’s technological genes and underlying capabilities.”
In May 2025, Xiaomi officially launched its self-developed SoC chips, the Xiaomi Xuanjie O1 and the Xuanjie T1 watch chip. The Xuanjie O1 chip is featured in the Xiaomi 15 S Pro and the Xiaomi Pad 7 Ultra; the Xuanjie T1 watch chip is featured in the Xiaomi S4 smart watch.
Lei Jun revealed on-site, “The cost of just the chip production is approximately 20 million USD.”
For Xiaomi, the value of self-developed SoC chips is not only reflected in traditional consumer electronics such as mobile phones and tablets but will also rely on its “Human-Vehicle-Home All-Ecosystem” strategy to achieve large-scale applications across multiple scenarios and categories.
In 2023, Xiaomi Group officially upgraded its strategy to “Human-Vehicle-Home All-Ecosystem”, which means that the application scenarios for chips may extend from mobile terminals to a broader range of hardware fields such as smart cars, smart homes, and wearable devices.
Lei Jun has previously revealed that the company is considering applying the second-generation Xuanjie chip in the automotive field.
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