Xiaomi has launched the Xring O3 system-on-chip, manufactured by TSMC on a 3-nanometre process, according to two people familiar with the matter who spoke to Reuters. The custom processor pulls computing, graphics, AI processing, and imaging onto a single die, arriving as Xiaomi’s profit falls amid memory price squeezes.
TSMC Manufacturing and Production Targets for the Xring O3
Neither Xiaomi nor TSMC confirmed the manufacturing arrangement when asked by Reuters. While the chip itself is Xiaomi’s official announcement, details regarding the foundry relationship and production numbers stem from internal sources.
The O3 chip is slated for Xiaomi’s upcoming flagship folding phone, with expected shipments ranging between 200,000 and 300,000 units. For a hardware maker shipping tens of millions of handsets quarterly, this production volume remains a small fraction of total output. This mirrors the trajectory of the previous generation. The Xring O1, launched in May 2025, crossed a million cumulative shipments across phones, tablets, and watches, though smartphones accounted for only about 150,000 of those units.
Did you know? Custom silicon at low volumes functions primarily as a proof of capability rather than a direct bill-of-materials replacement for suppliers like Qualcomm and MediaTek.
Why Foldable Phones Host First-Gen Silicon
Targeting a folding handset aligns with the operational logic of custom silicon development. Foldables represent low-volume, high-margin devices purchased by premium consumers, creating a forgiving environment for a first-generation part.
Apple, Samsung, and Huawei previously established this playbook by building in-house processors to differentiate flagships and minimize supply chain exposure. Xiaomi’s own journey began with the Surge S1 in 2017, an initiative that stalled and redirected its chipset division toward connectivity and IoT components for years.
Choosing TSMC’s 3-nanometre family rather than leaping to 2nm keeps costs manageable. Reports indicate the intermediate O2 chip utilizes the N3P variant, placing Xiaomi slightly behind the cutting-edge silicon driving next year’s broader Android tier. TSMC has declined to rule out further price hikes as manufacturing expenses rise, while larger competitors battle for leading-edge wafer allocation.
Geopolitical Advantages Over Domestic Rivals
Unlike Huawei, Xiaomi operates free from the U.S. export controls that severed Huawei from TSMC manufacturing lines. This distinction allows Xiaomi to procure leading-edge capacity in Taiwan while domestic competitors work around restrictions using local foundry capabilities.
This dynamic explains why a Chinese firm designing advanced silicon does not automatically mean domestic manufacturing. BYD, by comparison, pursued the domestic route for China’s first 4-nanometre driving chip.
Timing presents immediate financial hurdles. Xiaomi is currently absorbing steep component costs driven by a persistent memory shortage, making the addition of a custom flagship processor a complex margin calculation.
Product Integration and Future Outlook
Xiaomi has not yet published full technical specifications for the O3, named the specific folding device housing it, or provided a release date. Furthermore, it has not clarified whether the architecture will scale across tablets, wearables, connected cars, and PCs.
Pro Tip: Watch for the second phone that uses the O3 to determine whether the Xring series transitions from a technological showcase into a core supply chain strategy.
Frequently Asked Questions
Who manufactures Xiaomi’s Xring O3 chip?
TSMC manufactures the Xring O3 on its 3-nanometre process, according to sources familiar with the matter who spoke to Reuters.
Which devices use the Xring O3 processor?
The O3 chip is earmarked for Xiaomi’s upcoming flagship folding smartphone, with expected shipments between 200,000 and 300,000 units.
How does Xiaomi’s chip strategy differ from Huawei’s?
Unlike Huawei, Xiaomi is not subject to U.S. restrictions cutting off access to TSMC, enabling Xiaomi to utilize advanced Taiwanese foundry capacity.
Is Xiaomi replacing Qualcomm and MediaTek chips entirely?
No. At current low production volumes, custom silicon serves to prove technical capability rather than replace major commercial suppliers in the bill of materials.
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