Xiaomi Challenges Huawei with New TSMC-Manufactured Xring O3 Chip for Foldables

Key Highlights

• Xiaomi introduced the Xring O3, its second proprietary mobile processor, manufactured using TSMC’s advanced 3-nanometer process
• The processor will drive Xiaomi’s next premium foldable smartphone, with planned production of 200,000 to 300,000 devices
• TSMC has been tapped to manufacture two additional Xiaomi processors: the Xring O100 for artificial intelligence and the Xring D100 for self-driving technology
• Industry analysts predict global smartphone deliveries will contract by 14% throughout 2026, creating market-wide challenges
• Xiaomi’s phone sales dropped to 65 million units in H1 2026, compared to 84 million during the corresponding 2025 timeframe

On Monday, Xiaomi revealed its latest Xring O3 mobile processor, which Taiwan Semiconductor Manufacturing Company will fabricate using cutting-edge 3-nanometer manufacturing processes. This represents the Chinese manufacturer’s second proprietary chip following the Xring O1’s debut in May 2025.

Industry insiders indicate the O3 will serve as the central processing unit for Xiaomi’s forthcoming premium foldable smartphone. According to sources with knowledge of the strategy, the company anticipates manufacturing between 200,000 and 300,000 units of this device.

The foldable smartphone category represents the premium tier of mobile devices. By entering this segment, Xiaomi directly challenges Huawei, which dominated 68% of China’s foldable market during Q2, delivering 1.6 million devices.

Neither Xiaomi nor TSMC provided official statements regarding the chip’s production partner, manufacturing specifications, or volume projections. The sources requested anonymity due to the confidential nature of the information.

Broadening the Semiconductor Portfolio

Monday’s reveal extended beyond the O3 alone. Xiaomi announced it has engaged TSMC to manufacture the Xring O100, a 6-nanometer neural processing chip engineered to execute its MiMo large language model on end-user hardware.

Additionally, the Xring D100 represents a third processor built on 3-nanometer architecture specifically for autonomous vehicle applications. According to Xiaomi, the O3 has begun volume manufacturing, whereas the O100 and D100 have completed their development phase and will debut in the coming year.

The Xring O1, marking Xiaomi’s initial proprietary chip, was deployed across smartphones, tablets, and smartwatches. During last week’s financial results presentation, the company disclosed that devices featuring the O1 have surpassed one million cumulative shipments since introduction. Approximately 150,000 smartphones incorporating this processor have reached consumers since May 2025.

Declining Volumes and Escalating Expenses

Xiaomi’s semiconductor initiative unfolds against challenging industry conditions. During the first six months of 2026, the company distributed 65 million mobile devices averaging 1,329 yuan per unit, representing a decline from 84 million handsets priced at 1,141 yuan during the comparable 2025 period.

International Data Corporation projects worldwide smartphone deliveries will decline 14% throughout 2026. Elevated memory and component pricing has increased device costs and dampened purchasing activity among consumers.

Through proprietary chip development, Xiaomi mirrors strategies employed by Apple, Samsung, and Huawei. Manufacturers exercising greater control over their component supply chains can reduce expenses and create stronger product differentiation compared to competitors relying on standardized processors from Qualcomm and MediaTek.

The Xring O3’s introduction provides the strongest indication to date that Xiaomi remains dedicated to establishing a comprehensive chip development strategy spanning mobile devices, artificial intelligence, and automotive applications in the years ahead.