(Yicai) May 19 -- Xiaomi Group’s shares rose after founder Lei Jun said the Chinese maker of consumer electronics and electric cars will hold a product launch event on May 22 to debut its first self-developed phone chip and first sport utility vehicle.

After sliding by as much as 3.9 percent in Hong Kong trading this morning, Xiaomi [HKG: 1810] finished 2.7 percent higher at HKD52.35 (USD6.70) a share. The benchmark Hang Seng Index closed little changed.

The Xring O1 chip has been independently developed and designed by Xiaomi, and is a milestone in the Beijing-based company’s 11 years of research and development of a mobile processor, Lei, who is also chairman, said on Weibo.

The launch later this week will mark the moment that Xiaomi officially joins Apple, Google, and Samsung as the only phone companies to make their own processors.

Xiaomi had spent more than CNY13.5 billion (USD1.9 billion) on Xring O1 as of the end of last month. The team behind it has over 2,500 staff, and investment in the chip unit is expected to top CNY6 billion (USD832 million) this year alone.

The new chip will be deployed in Xiaomi’s mobile phones and other products, President Lu Weibing revealed recently.

Xiaomi’s phone business is thriving, with shipments surging nearly 40 percent to 13.3 million units in the first quarter from a year ago, representing the biggest single slice of China’s handset market. 

But the picture is less rosy at its automotive unit, which has been battered by recent controversies and negative public opinion. Xiaomi’s car sales have been falling steadily, with 7,000, 5,700, and 5,200 sold in the 17th, 18th, and 19th weeks of 2025, respectively, according to figures from the China Automobile Dealers Association.

As a result, much is riding on the launch of the YU7. Xiaomi’s first SUV could challenge Tesla’s Model Y, which dominates the Chinese market for compact, pure electric SUVs, according to a research report from Guojin Securities.

About 1.66 million compact electric SUVs were sold in China last year, of which 556,700 were Model Ys.

Editor: Tom Litting