Xiaomi To Create Chip That Will Rival Samsung And QUALCOMM, Inc. (NASDAQ:QCOM)

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Chinese smartphone giant is reportedly working on a processor chip that that will compete against chips made by industry giants such as QUALCOMM, Inc. (NASDAQ:QCOM) and Samsung.

One of the company’s component partners revealed that the Chinese firm plans to launch the chipset, which is called Rifle, during a company event which will be held in May. The chipset will be used in budget devices that will compete with other devices from mobile industry giants. Xiaomi will rely on a standard core license technology from ARM, an intellectual property company based in Britain.

The APU chips will have the capacity to read and write data rather than taking the memory chip approach. This means that the chips will bring in more profit than standard memory chips. An official from the company stated that more details about the APUs will be released in the company’s official statement.

Xiaomi currently relies on chipsets from other companies including Samsung, Qualcomm, and MediaTek, who will soon become its competitors. The Chinese firm will most likely have to terminate its reliance on these firms, though it will be difficult. However, such a move would be important for the Chinese company from a cost point of view. Qualcomm receives a lot of money from device manufacturers for patent royalties for the use of its APUs, and the government of China does not feel happy about it. Strict restrictions were recently imposed on Qualcomm, thus causing device manufacturers in China to seek out different strategies.

The loyalty issue is one of the reasons Qualcomm is speeding up its efforts to manufacture its own APUs. If the company manages to achieve this objective, the demand for chipsets from Samsung and Qualcomm will be negatively affected especially because they rely on China a lot for their APU sales. There is a lot of demand in the country, and it is currently the largest market for handsets in the world. There were more than 525 million smartphone users in China in 2015.

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