Xiaomi plans to use smartphone chips designed in-house in the second half of 2016

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Aloysius Low/CNET
Xiaomi, China’s leader in smartphone shipments in 2015, has aspirations to be a chipmaker this year. This would put Xiaomi in the same boat as Apple, Samsung, and Huawei, which also design chips in-house.

The Chinese smartphone maker hopes to use smartphone processor chips designed in-house in the second half of 2016, according to Reuters. Xiaomi will use these in-house chips in mid- to lower-priced RedMi Note series of smartphones.

The company has hired 200-300 people to work on designing smartphone processor chips, according to a source speaking with Reuters. It’s unclear how many chips Xiaomi plans to make this year.

Xiaomi’s move into the chipmaking game may put pressure on current industry leaders Qualcomm and MediaTek. Qualcomm, based in San Diego, California, ended the third quarter of 2015 with 67 percent of the 4G-integrated baseband processor market, according to Bloomberg data. Taiwanese MediaTek ended the same period with 17 percent of the market. Qualcomm has seen its market share decline while MediaTek has seen a steady climb.

MediaTek, which currently supplies most of the chips in Xiaomi’s mid- to low-priced handsets, may experience the biggest effects of Xiaomi’s in-house-designed chips.

Xiaomi was the leader in smartphone shipments to China in 2015, according to International Data Corporation (IDC). The company shipped 64.9 million units in China, giving it 15.0 percent of the market. Huawei (14.5 percent), Apple (13.4 percent), OPPO (8.1 percent), and vivo (8.1 percent) followed.

Part of Xiaomi’s success appears to be tied to its $141 average selling price, the lowest of the top five vendors in China.

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