As part of its strategy to win the Internet of Things (IoT) market, Xiaomi will establish a new subsidiary in chip production sector named Dayu. Xiaomi plans to restructure the Pinecone chip company which was founded back in 2014, to focus on its vision.
“Now the top three of the world’s smartphone companies have all mastered chip technology. We also have to make our artificial technology one of the top,” Xiaomi CEO, Lei Jun said at the announcement event.
A New Subsidiary Factory
Some of Pinecone‘s employees will be segregated into a new company called Dayu. In Chinese, Dayu (大鱼) is translated literally to “Big/Giant Fish”.
So, what’s the main difference between the chip production company: Pinecone and Dayu? In the future, Dayu will focus more on chipset research and development for Internet of Things (IoT) solutions.
IoT Extends Internet Connectivity
IoT is short for Internet of Things. The Internet of Things refers to the ever-growing network of physical objects that feature an IP address for internet connectivity, and the communication that occurs between these objects and other Internet-enabled devices and systems.
The Internet of Things extends internet connectivity beyond traditional devices like desktop and laptop computers, smartphonesand tablets to a diverse range of devices and everyday things that utilize embedded technology to communicate and interact with the external environment, all via the Internet.
IoT products include smart speakers, smart lamps, smart cameras, and so on.
The Plans for Dayu and Pinecone
While Pinecone will still focus on chipsets to be used on smartphones. One of the chips made by Pinecone is the Surge S1 chip introduced in the past March, 2017.
Xiaomi will own 25 percent of Dayu’s shares. The new subsidiary will also seek its own funding. As quoted by KompasTekno from TechNode, Friday (5/4/2019), a number of investment firms are reportedly interested in investing in Dayu.
IoT business has become a big interest in the moment. Huawei, a fellow Chinese vendor, claimed last year that its IoT chip, HiLink, had connected to 300 million devices, including AI speakers and vehicle systems.
Chip manufacturers are also currently racing to create the most energy-efficient IoT chips to support cloud-based IoT platforms. The interest stems in anticipation for 5G waves and the increasing number of devices that will be connected to each other.
Xiaomi itself earlier this year has set a dual strategy “smartphone + AioT” as the company’s focus. Xiaomi’s own IoT business revenue in 2018 was reported to have increased of 86.9%. That number almost doubled the growth of the mobile business per year which amounted to 41.3% in the same period.
The smartphone business which experienced a 4.1% in shipments (based on IDC report) in 2018 ago, as well as a slowing trend in growth in China, also whipped up Chinese mobile vendors to diversify their business.