If mobile phone chips are free, it must be Xiaomi's doing

Although Xiaomi has not launched any new products recently, this has not stopped this young technology company from grabbing headlines. First, it was revealed that its valuation exceeded 40 billion US dollars, and then Chen Tong, a legendary figure in the domestic Internet portal, joined the company. Every piece of news is a heavyweight. Just last weekend, another sensational news related to Xiaomi came out - it is going to make its own mobile phone chips.

Many consumer electronics brands have the idea of ​​getting involved in the upstream chip industry, but few can actually achieve it. The most famous one is Apple. The A series chips used in iPhone and iPad are designed by Apple itself and then outsourced to other manufacturers. Other representative brands include Samsung and Huawei, which also have their own mobile phone chip product lines.

Apple has the A series, Samsung has the Orion, and Huawei has the HiSilicon. When promoting mobile terminals, these in-house chips are often used to endorse the products to reflect the company's R&D strength. But compared to them, Xiaomi's entry into the chip field this time is a bit "awkward". So far, starting with the head Lei Jun, no Xiaomi person has taken the initiative to admit that "Pinecone Electronics" has anything to do with them.

What is "Songuo Electronics"? This is a company with a registered capital of only RMB 100,000, of which Xiaomi holds 51% and Datang Telecom's wholly-owned subsidiary, chip developer Unichip Technology, holds 49%. Songuo Electronics has just spent more than RMB 100 million to obtain a technical license for the SDR1860 platform from Unichip.

In simple terms, Pinecone Electronics can make mobile phone chips using Unichip's existing technology. In other words, Xiaomi phones can be equipped with processors made by its own holding company in the future. This is exciting, as it means Xiaomi will become one of the few consumer electronics brands in the world that can develop its own mobile phone processors!

Since it is such a happy event, why keep it secret? After the Pinecone Electronics incident was exposed, some people believed that Xiaomi's silence was due to guilty conscience. After all, Leadcore's SDR1860 products are low-end in the industry. In addition, Xiaomi's move was mainly to make up for its shortcomings in patents, so it had to be done secretly.

In my opinion, this speculation itself is ridiculous and meaningless. From Xiaomi's perspective, announcing "Chen Tong joining" means sending a "signal" of entering the content field in a strong way, but what about announcing "self-produced processors"? It is of no help at this moment.

Therefore, instead of worrying about whether Xiaomi will make chips, it would be more meaningful to focus on what will happen after Xiaomi makes chips.

The first point is something everyone can think of - Xiaomi will further increase its sales next year, with the goal of selling 100 million units.

Through Pinecone Electronics, Xiaomi can achieve this better, faster and more reliably. In fact, at the Xiaomi 4 launch conference this year, Lei Jun mentioned "Let everyone enjoy the fun of technology", which means that Xiaomi phones must first be affordable and available to more people. When the chips are self-produced, the controllability of Xiaomi's industrial chain will be further improved, and these two points will become easier to solve.

As for the products of Leadcore, there are gaps in terms of technical maturity and commercialization compared with Qualcomm and MediaTek. Is the quality reliable? I believe Xiaomi is more concerned about this issue than consumers. After all, the goal is to increase the volume. If there are flaws, the impact will be very large and may be a devastating blow to the company. Therefore, Lei Jun cannot take it lightly and will definitely go all out.

The second point may seem far-fetched, but there is a traceable clue - the chips are free.

Not long ago, Lei Jun said at a seminar: "Within three to five years, there will be a new chip company that sells chips by the grain of sand and achieves great success." According to his estimate: if chips are free, high-end mobile phones like Xiaomi will only cost 500 yuan in the future. And just a week later, "Pinecone Electronics" surfaced. Both events are related to Lei Jun, which is too much of a coincidence.

Assuming that Lei Jun’s ultimate idea is to make chips free, let’s take a look at its possible business model - first test it on Xiaomi mobile phones and look for the possibility of "transfer payments", that is, transferring the chip costs to the Xiaomi ecosystem or even other business modules of Lei Jun.

Then, it cooperates with various companies in the industry that make consumer electronics products, providing them with free processor chips, on the condition that they are paired with a certain Lei Jun business, provided that this business does not affect the other party's business.

Refer to the path of Google's open source system Android defeating Microsoft's paid system WinCE, the lethality of free should not be underestimated. Finally, "Pinecone" chips may penetrate into every link in the hardware field, just like Android now. How big a business opportunity is that? It goes without saying.

As for how to support this free meal financially, "Songuo Electronics" is a joint venture company, and in theory it can also absorb other shareholders to join, whether it is money or resources, there is still room for imagination. More importantly, the first entrepreneurial principle that Lei Jun believes in is to have "unlimited money." If he really wants to go the route of free chips, he will definitely be prepared.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.