DONGGUAN, China — Perhaps, it’s about time, maybe it’s inevitable. When Apple, Huawei and Samsung, three out of the five largest smartphone vendors in China are already designing handsets using their own processors, Xiaomi figures it’s time to go vertical.
Xiaomi wants its own custom-designed processors to differentiate its products and control its destiny, an executive of Leadcore Technology told EE Times.
Rather than putting together an in-house chip design team, Xiaomi chose Leadcore, a fabless chip company wholly-owned by China’s Datang Telecom Technology and Industry Group, as its partner to source the technology
Product, technology, patent
Leadcore is working with China’s fastest growing smartphone company on “all three different levels — product, technology and patent,” Marshal Cheng, vice president of Leadcore explained during a one-on-one meeting at China’s industry gathering here this week.
Cheng calls Xiaomi’s strategy shift “inevitable,” based on volume (Xiaomi shipped 61.12 million units in 2014 by the company’s own account) and the need to differentiate.
One hiccup in the supply chain has the potential to trip up the Xiaomi product launch, Cheng explained. To stand out, Xiaomi can’t keep depending on Qualcomm’s Snapdragon or MediaTek’s solutions. Everyone else is using them.
China Smartphone Shipments by top 5 vendors (unit: millions)
There were rumors in China late last year that Xiaomi had made a 51 percent investment in Leadcore. Cheng flatly denied this. “It’s not possible. One third of our parent group — Datang Telecom Technology and Industry Group — is still state-owned.”
Leadcore has inherited Datang Telecom’s pedigree, which might prove advantageous to Xiaomi. Founded in 1998 by the China Academy of Telecommunication Technology (CATT), China’s multinational telecom equipment company is best known for its leading role in developing the Chinese TD-SCDMA 3G mobile telecommunications standard through a subsidiary, Datang Mobile.
“The modem technology that’s ready in silicon and patent portfolio created by CATT including LTE and LTE-A make us very attractive to Xiaomi,” explained Cheng.
Equally important to Xiaomi in its union with Leadcore is Xiaomi’s reputedly weak IP portfolio. It was exposed last year when Ericsson sued Xiaomi in India, saying the young smartphone maker hadn’t licensed inventions by Ericsson that enable wireless devices to connect to networks. Qualcomm in recent months has been pitching its vast patent portfolio to Chinese smartphone vendors, as a protection against lawsuits from Chinese vendors expanding their business outside China.
Datang Telecom’s IP portfolio is not as extensive Qualcomm’s IP portfolio. But, through Xiaomi’s deal with Leadcore, it offers some protection.
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