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Chinese smartphone makers OPPO and Xiaomi are reportedly developing their own in-house 5G SoCs. According to a DigiTimes report, the two companies could introduce their respective sub-6GHz 5G chipsets as soon as this year, or early 2022. They will join another Chinese firm UNISOC, a fabless chipmaker whose market share grew leaps and bounds in 2020, in the race to make 5G smartphone chipsets after their compatriot Huawei was blown away from the race by American trade sanctions.
Xiaomi and OPPO perhaps want to avoid a similar fate and are thus starting to make their own chips. Although Huawei designed its own Kirin chips, it outsourced production to TSMC. However, the trade restrictions imposed by the US government force the latter to stop doing business with the beleaguered Chinese company. As a result, Huawei’s struggling to survive in the smartphone industry.
As Apple has proven, designing and manufacturing custom chipsets allows for better integration of hardware and software. Though Samsung has failed to emulate the iPhone maker’s success, there’s no reason why Xiaomi and OPPO couldn’t try.
Xiaomi, in fact, isn’t completely new to the scene. The company did launch a smartphone SoC back in 2017. Built on the 28nm process, the Xiaomi Surge S1 chipset powered its Mi 5c smartphone. However, not much has come from the company’s chip division since then. The Surge C1 ISP for the Mi Mix Fold camera was the company’s first image signal processor. It would be interesting to see how well it does (and OPPO as well) in making 5G chipsets for smartphones.
Xiaomi and OPPO are making their own 5G chips amid a global semiconductor shortage
The news of OPPO and Xiaomi making their own in-house 5G chipsets comes at a time when the whole world is facing an unprecedented semiconductor chip shortage. It’s not that there aren’t enough chips, or there isn’t enough material available to make more chips. The real issue is that there aren’t enough chipmakers.
The chip manufacturing industry is relatively small. There are many chipmakers out there, but not all of them manufacture their chips on their own. The likes of Qualcomm and AMD, who design their own chips, have a fabless model, i.e. they outsource the actual manufacturing to other companies like Samsung or TSMC.
As the COVID-19 pandemic hit, the world witnessed a sudden rise in demand for tech products. As a result, there’s a global rise in demand for semiconductor chips as well. The demand is so high that it’s outpacing the limited supply, thus causing a global semiconductor chip shortage, as there aren’t many chip manufacturing companies out there.
Of course, this shortage won’t last forever as the demand for tech products will eventually die down at some point. Also, work is being done to mitigate future shortages. TSMC has announced plans to invest $100 billion to increase its production capacity; Intel is opening doors to produce chips for other vendors and also plans to spend $20 billion to expand its production facilities.
However, the current situation is that tech firms around the world are scrambling for chip supply. The smartphone industry may be the least affected by this chip shortage. But 5G rollouts are getting delayed and that indirectly impacts the smartphone industry.
To that end, phone makers Xiaomi and OPPO are now starting to make their own 5G chips. This should go to some extent to address this problem which, industry watchers believe, is going to stay for a while. How things pan out for the two companies now remains to be seen.