September 25, 2025 – Beijing – Xiaomi founder Lei Jun delivered his sixth annual keynote on the evening of September 25, unveiling the Xiaomi 17 series. While the device launch attracted headlines, the real highlight was Lei Jun’s candid disclosure of Xiaomi’s chip development journey, a topic the company has rarely discussed in detail before.
We’ve faced huge misunderstandings from the outside,People think we suddenly succeeded in chip-making overnight, but actually, we just only announce things after they’re done.”
The Origins: Pinecone Electronics and the First Xiaomi Chip
Xiaomi’s ambitions in chip-making go back 11 years to 2014 with Pinecone Electronics. After three years of R&D, Xiaomi launched its first in-house chip, Surge S1, powering a mid-range phone that sold 600,000 units. Despite this promising start, Lei Jun realized early on:
“The Pinecone path couldn’t continue.”
Xiaomi’s first SoC initiative lasted four years. In 2018, the company paused mobile SoC development, based on two counterintuitive insights:
-
High-end first: Smartphone makers shouldn’t enter mid-to-low-end chips; success requires aiming for the high-end.
-
Unified teams: Separating chip and phone teams leads to misaligned goals, making collaboration difficult.
Resuming the Chip Journey: Challenges and Determination
After restarting in early 2021, Xiaomi faced major obstacles. Lei Jun recalled two critical moments of uncertainty:
-
2022 Revenue Drop: International political tensions caused Xiaomi’s revenue to fall 15%, shaking confidence in heavy chip investment.
-
Industry Shocks: The sudden disbanding of OPPO’s Zheku team created fear internally, prompting concern about team morale.
Despite these challenges, Lei Jun remained resolute, asking the team:
“If we abandon chips now, ten years later, will we celebrate saving a few billion or regret losing Xiaomi’s chip business forever?”
His decision reaffirmed the strategic necessity of chip development, ensuring that Xiaomi would not give up despite financial and operational risks.
XuanJie O1: From Concept to 3nm Breakthrough
The Xiaomi XuanJie O1, built using 3nm technology, became the symbol of this determination.
-
Early 2024: Chip fabrication began, costing over $20 million in wafer runs alone.
-
May 22, 2024: The first batch successfully returned. Engineers transported the precious chips in a small paper bag to the lab for testing.
-
May 22, 2025: XuanJie O1 officially launched, powering Xiaomi’s new devices.
Lei Jun calls chip-making “Xiaomi’s essential path to success”, committing at least 10 years and billions to future chip development.
Competing with Apple: A Strategic Marathon
Lei Jun addressed Xiaomi’s ongoing rivalry with Apple. This year, Apple made bold improvements in the iPhone 17 series, prompting Xiaomi to skip Mi 16 and release the Mi 17 directly.
“Competing with Apple is a long and painful process,” he said. “We break down multiple dimensions and tackle them one by one, benchmarking to eventually surpass them.”
While Xiaomi previously focused on specifications, the strategy now emphasizes user experience, aiming not just to match but ultimately to surpass Apple.
China’s Smartphone Market: Volatility and Opportunity
Lei Jun described China’s smartphone market as “the most absurd market” he has ever seen:
-
Six major brands rotate dominance every few months.
-
Each holds around 15% market share.
Xiaomi has abandoned the idea of rapid market wins:
“Our goal is steady 1% growth per year, aiming for 20% market share in five years. Time is Xiaomi’s friend; we are long-distance runners.”
Five Years of Reflection and Transformation
Lei Jun shared a personal reflection on Xiaomi’s transformation over the past five years:
-
2019–2020: After reaching over ¥200 billion revenue and joining the Fortune Global 500, he felt anxious about competing with Apple, Samsung, and Huawei.
-
Strategic Review: He applied a “Go-inspired review” method, asking:
-
What did we do right?
-
What went wrong?
-
If we started over, how would we do it?
-
-
Team Rebuilding: Xiaomi brought in external top talent (e.g., Lu Weibing, Wang Xiaoyan, Lin Shiwei) and promoted early employees like Zhu Dan, who led the XuanJie O1 project.
The Future of Xiaomi
Lei Jun concluded:
“The past five years have completely transformed Xiaomi—from an internet company to a smart manufacturing powerhouse. Our progress is not just in phones, cars, and premium devices, but in reshaping the company’s DNA. Continuous effort and growth can allow any team to achieve what once seemed impossible.”
