Xiaomi's 3nm Chip: A Masterclass in How China Bypasses US Restrictions

Xiaomi just dropped something that made Washington uncomfortable. The Chinese phone maker announced mass production of its own 3nm system-on-a-chip (XRING 01)—making it the fourth company worldwide to pull off this feat, sitting alongside Apple, Qualcomm, and MediaTek. But here’s the thing that matters: they did it while US export controls are supposedly tightening China’s semiconductor access. So how’d they manage it?

What’s the Big Deal About 3nm?

Chip manufacturing nodes (measured in nanometers) are about density—how many transistors you can cram into one die. Smaller = more transistors = more powerful and efficient.

The XRING 01 packs ~19 billion transistors, matching Apple’s A17 Pro from 2023. At 3nm, you get:

• Substantially higher performance
• Better power efficiency (more computing bang per watt)
• Advanced capabilities rival chips can’t match

Designing a 3nm chip at scale? That’s a different beast. It demands world-class expertise, cutting-edge design tools, and access to the planet’s most advanced fabs. Most companies can’t do it. Xiaomi just did.

How Good Is It Really?

Benchmarks are still rolling in, but early data suggests the XRING 01 genuinely competes with flagship chips like Apple’s A18 and Qualcomm’s Snapdragon 8 Elite. Built on Arm architecture with Cortex-X925 CPU cores and Immortalis-G925 GPU.

This is huge for Xiaomi because the company historically leaned hard on Qualcomm chips for premium models. Now? They’re vertically integrated at the high end, which strengthens their brand and independence.

The Geopolitical Plot Twist

This is where it gets interesting. The US export restrictions target:

1. Advanced AI chips for China
2. Leading-edge fab equipment (especially ASML’s EUV machines) that would let Chinese foundries like SMIC produce cutting-edge nodes domestically

What the restrictions don’t block:

• Chinese companies designing advanced chips
• Foreign foundries (like TSMC in Taiwan) manufacturing them for non-military use

Xiaomi clearly leveraged this gap. The XRING 01 is almost certainly manufactured by TSMC using their 3nm tech—a non-China-based foundry, so it sidestepped the equipment restrictions.

The real constraint? China still can’t mass-produce 3nm chips on mainland soil. That’s why the restrictions focus there—to maintain the manufacturing bottleneck. Xiaomi’s move proves that targeting foundry equipment is more effective than blocking design, because chip design can happen anywhere with talent.

What This Means for China’s Chip Strategy

Win: China demonstrated serious chip design capabilities and willingness to invest big ($50 billion over 10 years for Xiaomi). State media called it a “hardcore technology breakthrough.”

Problem: The continued dependence on TSMC exposes China’s real vulnerability—manufacturing. US restrictions explicitly target fabs and fab equipment, forcing China to outsource advanced production indefinitely.

The takeaway: China is winning at design but losing at self-sufficiency in manufacturing. Until they crack domestic advanced fabrication, they’ll remain dependent on foreign—particularly Taiwanese—fabs.

What’s Next?

For Xiaomi: The XRING 01 is a stepping stone toward vertical integration, but sustained success requires competing not just on hardware specs but also software optimization and ecosystem—areas where Apple and Qualcomm have decades of advantage.

For the industry: Xiaomi’s move will intensify competition in premium phones, forcing traditional chip suppliers to innovate faster.

For geopolitics: This proves that semiconductor export controls work best when targeted at manufacturing infrastructure, not design. Chinese companies can design cutting-edge chips, but they’ll struggle to manufacture them domestically for years to come.