Beijing-based smartphone maker Xiaomi Inc. has reportedly achieved a significant technological breakthrough with the successful “tapeout” of its first 3 nanometer (nm) system-on-chip (SoC) processor. According to Tang Jianguo, the chief economist at the Beijing Municipal Bureau of Economy and Information Technology, the news was disclosed on October 20 during an interview with Beijing Satellite TV. If verified, this development would mark a historic milestone for China’s chip design industry, as it would be the first 3nm chip designed by a Chinese company.
The tapeout of Xiaomi’s new processor is particularly noteworthy as it highlights China’s growing capabilities in the highly competitive semiconductor space. While details regarding the chip’s architecture, including its central processing unit (CPU), graphics processing unit (GPU), and other specifications, have not yet been revealed, the implications of such a technological leap have already sparked widespread attention both in China and internationally.
In the semiconductor industry, “tapeout” refers to the stage in chip development when the final design is complete and ready to be sent for manufacturing. The term originates from a time when magnetic tapes were used to store design data for fabrication. It represents a crucial phase in the development process, as it signals that the design is finalized, and mass production can begin once manufacturing processes are validated.
The 3nm SoC designed by Xiaomi is expected to enter mass production in the first half of 2025. This places Xiaomi among an elite group of companies globally working with advanced chip technologies, joining the ranks of tech giants like Apple and Samsung.
The news that a Chinese company has successfully developed a 3nm chip could have profound implications for the global semiconductor industry. Chinese media have described the breakthrough as a potential game-changer for China’s technological ambitions, as it demonstrates that the country is making progress in areas that were previously dominated by Western and Taiwanese companies.
In recent years, China‘s semiconductor industry has faced significant challenges due to sanctions imposed by the United States, which have restricted access to critical technologies, including electronic design automation (EDA) software and high-end chip manufacturing equipment. EDA software is vital for designing complex integrated circuits, such as those found in 3nm chips, and the U.S. has a dominant position in this market.
Despite these obstacles, Xiaomi’s achievement indicates that Chinese companies are finding ways to advance their chip design capabilities, potentially with the help of partners like Taiwan’s MediaTek. Industry experts speculate that the 3nm chip was jointly developed by Xiaomi and MediaTek and will be manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker.
According to technology columnist “Uncle Biao,” the likely involvement of MediaTek in Xiaomi’s 3nm chip design underscores the importance of collaboration in achieving such breakthroughs. MediaTek, a Taiwanese fabless semiconductor company, has long been a leader in the development of mobile processors, and its expertise in chip design would have been crucial to Xiaomi’s success.
The choice of TSMC as the manufacturer for the 3nm chip is also significant. TSMC is renowned for its ability to produce cutting-edge semiconductors and is currently the only foundry capable of mass-producing 3nm chips at scale. If Xiaomi’s chip is produced using TSMC’s advanced N4P process, as some reports suggest, it would benefit from improved performance, power efficiency, and transistor density compared to previous generations of chips.
However, this collaboration raises questions about potential geopolitical risks. The U.S. government has previously sanctioned Chinese technology firms like Huawei, citing national security concerns. If Xiaomi’s chip poses a similar perceived threat to U.S. interests, the company could face similar sanctions.
Xiaomi’s breakthrough in 3nm chip design could have far-reaching implications in the ongoing tech competition between the United States and China. In recent years, the U.S. has implemented a series of measures aimed at curbing China’s access to critical technologies. These measures include export controls on high-end AI chips, semiconductor manufacturing equipment, and the aforementioned EDA software.
In August 2022, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) tightened restrictions on Chinese access to electronic computer-aided design (ECAD) software, which is widely used in the military and aerospace industries. At the time, Chinese analysts downplayed the immediate impact of these restrictions, noting that China was not yet designing 3nm chips. However, with Xiaomi’s recent success, the landscape may be shifting.
Wccftech.com, a U.S.-based IT gadget website, speculates that Xiaomi could be the next Chinese firm to face U.S. sanctions due to its achievement in chip design. If sanctioned, Xiaomi could lose access to key technologies and partners, potentially disrupting its ability to produce 3nm chips. Moreover, the website suggests that if Xiaomi has successfully reached the tapeout stage for its 3nm SoC, other Chinese firms, including the already-sanctioned Huawei, may also be able to utilize the processor in their devices.
For years, the U.S. has dominated key segments of the global semiconductor supply chain, and its export controls have created significant barriers for Chinese firms. Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies (CSIS), identified four primary choke points in the U.S. strategy to restrict China’s chip development: EDA software, high-end AI chips, chip-making equipment, and related components.
Despite these challenges, China has been working to develop its own semiconductor technologies to reduce its reliance on foreign suppliers. Xiaomi’s efforts to develop a 3nm chip can be seen as part of a broader strategy by Chinese companies to achieve self-sufficiency in critical technologies.
Xiaomi has been working on chip design for nearly a decade. In 2017, the company launched its first SoC, the Surge S1, which was built on TSMC’s 28nm process. However, the S1 was plagued by overheating issues, limiting its commercial success. In 2020, Xiaomi attempted to launch a second chip, the Surge S2, but it failed to complete the tapeout process.
The difficulties faced by Xiaomi highlight the challenges of designing and manufacturing cutting-edge semiconductors. Lei Jun, Xiaomi’s founder and CEO, has previously acknowledged that chip design is a high-risk endeavor that often requires substantial investment with no guarantee of success.
Xiaomi’s latest breakthrough is not just about technological prowess; it’s also a strategic move to reduce dependence on foreign suppliers like Qualcomm, whose Snapdragon processors are widely used in Xiaomi’s smartphones. As the cost of Qualcomm’s processors rises, developing in-house chips becomes an increasingly attractive option for Xiaomi.
A Yunnan-based technology columnist noted earlier this year that Xiaomi’s efforts to develop its own SoC processors are crucial for the company’s long-term competitiveness. The columnist pointed out that Qualcomm’s processors have become more expensive in recent years, and developing an in-house alternative would allow Xiaomi to reduce costs and improve profit margins.
Furthermore, by developing its own chips, Xiaomi can better optimize its hardware and software, potentially leading to improved device performance and user experience. This could give Xiaomi a competitive edge in the global smartphone market, where it faces fierce competition from rivals like Apple, Samsung, and Huawei.
MediaTek’s role in Xiaomi’s chip development journey cannot be overlooked. As the world’s largest supplier of smartphone processors, MediaTek has a wealth of experience in designing advanced SoCs. According to Canalys, MediaTek maintained its position as the top smartphone processor maker in the first quarter of 2023, with a global market share of 39%.
Xiaomi, Samsung, and OPPO were the top three contributors to MediaTek’s smartphone processor shipments during this period, representing 23%, 20%, and 17% of its total shipments, respectively. The close relationship between Xiaomi and MediaTek has been a key factor in Xiaomi’s ability to compete in the global smartphone market.
By collaborating with MediaTek on its 3nm chip, Xiaomi is leveraging the expertise of a trusted partner while also positioning itself to gain greater control over its supply chain. This collaboration could help Xiaomi navigate the challenges posed by U.S. export controls and other geopolitical risks.
