Xiaomi Invests in IoT Gadgets

Although known for their inexpensive yet powerful smartphones, Xiaomi has not yet fully explored its capabilities outside its home territory of China. For this Chinese company, cheap does not immediately translate to ineffective. The smartphone producer has managed to compete on the same level as Huawei, Samsung, and even Apple. In fact, within China, Xiaomi is the preferred brand of smartphone, given its low price and good performance. As Xiaomi’s sales rose in recent times, Apple and Samsung have been stagnating, with Apple’s sales even slowly falling and lagging behind.

Given its local success, it seems that the people behind Xiaomi are planning to branch out, investing and exploring IoT gadgets and technology. Although a newcomer in the field, Xiaomi expects that its investments will ultimately lead to their success in the future.

The Chinese hardware giant is splitting off a part of its Pinecone chipset division into a new company called Dayu. Translating to ‘Big Fish’, the new branch of the company will be focusing on the research, development, and innovation of AI-based IoT chips for gadgets that are relevant to the project. The remaining part of the Pinecone team will continue working on mobile processors within Xiaomi, which means that the company will still be continuing their production of affordable smartphones.

Planned changes

The entire project is a part of Xiaomi‘s $1.5 billion AIoT investment, which was announced in January. This investment and expansion should ultimately help the company accelerate the development of its smart gadgets. The company’s IoT and lifestyle devices plans registered 86.9 percent year-on-year growth for the last financial year. The products that the company is selling includes smart TVs, Android TV boxes, air purifiers, and automated vacuum cleaners.

The chipset division was started by Xiaomi in 2014 as an exclusively owned secondary company called Pinecone. The company introduced its first homegrown chipset for smartphones called Surge S1 in 2017, which was later used in the midrange smartphone Mi 5C.

According to company chairman and CEO Lei Jun, Xiaomi needed time to catch up to big players when it came to manufacturing processors. Given that Apple and Samsung dominated the market at the time, Xiaomi needed to prove that it was capable to penetrate the market with its own products.

Chip technology is the centerpiece of the smartphone sector. However, it is highly cash-intensive and could often cost companies everything they have. Worse still, chip production does not always assure an effective product, which means chip manufacturers have to conduct tests multiple time in order to achieve a final product. In order for Xiaomi to challenge the world’s top three players, it needs to devote long-time investments, innovations, and efforts into the research, development, and production of chips. However, it faced a lot of issues when it was developing its next chipset. Ultimately, the processor was never formally launched.

However, Xiaomi never stopped in innovating and improving their chipsets. If you observe the Chinese market, users of Xiaomi smartphones used to be users of Apple and Samsung smartphones. However, after Xiaomi’s recent products and releases, they decided to convert to the local brand since it offers the same quality performance at a cheaper price. Some users even say Xiaomi’s processors perform better than that of Apple’s or Samsung’s.

The expansion could assist Xiaomi in overtaking rival brands in the Asian market, like Huawei and Apple. Given that other brands have invested in IoT gadgets as well, Xiaomi’s expansion is its way of throwing its hat in the ring, elevating itself to a position where it can finally compete at the top. If done right, Xiaomi could even overpower its rivals within the market, given the preference of the Chinese market towards the company. In the end, only time will tell if Xiaomi’s decision to expand and create innovations within the IoT gadget industry will lead to it soaring to greater heights.

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