Xiaomi Corp. is set to design its own mobile processor for upcoming smartphones, aiming to reduce its dependency on foreign chip suppliers like Qualcomm Inc. and MediaTek Inc. The company plans to begin mass production of its self-designed chip in 2025, according to sources familiar with the matter who requested anonymity.

This move is part of Xiaomi's broader strategy to increase its self-sufficiency in an increasingly competitive smartphone market dominated by Qualcomm-powered devices. By developing its own chip, Xiaomi also aligns with China's push to reduce reliance on foreign technology, a key focus of Beijing amid the ongoing tech rivalry with the United States.

The move into mobile chip development marks a significant step for Xiaomi, already investing heavily in electric vehicles (EVs) this year. However, creating a competitive smartphone chip will be challenging. Even tech giants like Intel Corp., Nvidia Corp., and Xiaomi's rival Oppo have struggled to compete in this space. Only Apple Inc. and Google's Alphabet have successfully transitioned to fully self-designed processors for their devices, while even Samsung Electronics continues to rely heavily on Qualcomm's chips for their superior efficiency and mobile connectivity.

For Xiaomi, the shift towards in-house chip production could not only enhance its smartphone offerings but also support its ambitions in the electric vehicle market. The company's interest in EVs began after being affected by sanctions from the Trump administration, which were later lifted.

Xiaomi's semiconductor ambitions could complicate its relationship with Taiwan Semiconductor Manufacturing Co. (TSMC), the chipmaker it relies on for contract production. TSMC faces increasing pressure from U.S. authorities to limit its dealings with mainland Chinese firms.

Xiaomi plans to increase its research and development spending to 30 billion yuan ($4.1 billion) in 2025, up from 24 billion yuan in 2024. This investment will focus on key areas including artificial intelligence, operating systems, and chip development, according to CEO Lei Jun, who co-founded the company nearly 15 years ago.