Xiaomi just announced its own processor

Moving beyond smartphones, laptops, and accessories, Chinese technology giant Xiaomi made a foray into the processor business, joining companies such as Apple and Samsung that use self-designed processors in their smartphones.

On Tuesday, Xiaomi announced the much-anticipated Surge S1, the first SoC (system-on-chip) it has built with Beijing Pinecone Electronics, a company it owns.

The Surge S1 is a mid-range SoC, which Xiaomi is positioning as a competitor to Qualcomm’s Snapdragon 625, and MediaTek's P20 and P10. In a slideshow with benchmark data of all the aforementioned chips, Xiaomi claimed that its processor topped performance.

The Surge S1 is a 64-bit capable, oct-core mobile processor, which comes coupled with quad-core Mali-T860 GPU, the company said. Xiaomi is also marketing the Surge S1 as a mobile processor that offers "upgradable baseband" with support for VoLTE (voice over LTE) HD calls.

Other features of the Surge S1 include improved security against fraudulent base stations, as well as improved elimination of static and background noise.

On the sidelines of the Surge S1 launch, the company launched a new variant of the Xiaomi Mi 5C, which is powered by the company’s processor. It's not clear if the company plans to license the processor to other smartphone vendors as well.

At the event, Lei Jun, CEO and co-founder of Xiaomi said the company realized long ago that to achieve its "long-term objectives, it would have to combine the development of hardware and software technologies, especially at the chipset level."

“The ability to create its own chipsets is the pinnacle achievement for any smartphone company. For Xiaomi, the move is an essential next step in our development. In order to deliver on our promise to make innovation available to everyone, we need to master the core technologies of our industry and tightly integrate the development of our hardware with our software,” he said in a press statement.

But making your own processor helps in many other ways as well. Xiaomi could boost its profit margin if it uses its own processors in smartphones, according to Shobhit Srivastava, an analyst at marketing research firm Counterpoint.

He added that processor itself costs as much as 35 percent of the BOM (billing of material). "On mid-range smartphones, it could account for as much as 50 percent of the total components cost," he told Mashable India.

With today's announcement, Xiaomi is joining Apple, Samsung, and Huawei, who all self-design the processors they use on their smartphones. By self-designing or manufacturing their own components, these companies are able to assume better control over how the hardware and apps on the smartphone work together.

However, it is unlikely that the Surge S1-powered smartphones will trickle out of China anytime soon. Xiaomi has partnered with a range of Chinese companies including telecom operators for IP rights, which suggests that it will have to strike a number of deals overseas as well, Srivastava added.