Apple does it. Samsung, too. You may not be as familiar with Huawei, but it's been doing it for years too. And now the Chinese smartphone powerhouse Xiaomi has joined this growing club of big companies that don't lean exclusively on Qualcomm and others for mobile chipsets. Instead, they just up and make their own.

You can't quite call it a trend, but seeing so many manufacturers invest in their own chipsets marks a significant shift in an industry long dependent on the same few silicon specialists. Like all big bets, it carries the promise of big rewards for the companies and their customers—and the threat of just as many risks.

Breaking Free

Let’s clarify up front that aside from Apple, these companies still do big business with Qualcomm, MediaTek, and other processor pros for “system on a chip” technology. And Apple still taps Qualcomm for the modem in the iPhone, despite pursuing a billion-dollar lawsuit over the company's business practices.

In one sense, this speaks to Qualcomm’s dominance and capabilities. Smartphone manufacturers rely on Qualcomm chips for the same reason spec home builders rely on Alabama white marble countertops: They’re top of the line.

“If you’re looking for a high-performance part, and connectivity is key, there’s really only one game in town,” says Patrick Moorhead, founder of Moor Insights and Strategy. “And that’s Qualcomm.” The company's deep resources and industry-wide relationships mean its chips just work, at a high level, with pretty much any hardware and software you can throw at it. That kind of ubiquity obviously benefits Qualcomm, but the fact that everyone uses the exact same chipset motivates companies like Xiaomi to develop their own alternatives.

In the cutthroat world of premium smartphones, the desire to differentiate makes sense. Nearly every flagship device next year that isn't an iPhone will use the Snapdragon 835 processor. It’s like having a Daytona 500 where car runs the exact same engine. Engineers might find other ways to tweak performance, but they're all fundamentally the same. “When you make your own chips you can design them to be ideal for your specific devices, rather than being designed for all possible use cases,” says mobile analyst Jan Dawson of Jackdaw Research.

You also dodge any rough patches a third-party supplier might experience. Rumors that Qualcomm’s Snapdragon 810 processor experienced overheating issues (later refuted) prompted Samsung to put the home-grown Exynos chips into the top-tier Galaxy S6 in 2015. Apple can do whatever it likes with its AX series of mobile processors, a freedom that reportedly has Cupertino considering a similar move in the Intel-dominated Mac space.

All of which sounds great—if you can afford it. And Xiaomi can afford to take the risks.

Where the Chips Fall

Two years ago, Xiaomi decided to control its own destiny. “We need to be able to make a chipset to stand out as someone who was really innovative,” says company spokesman John Chan. “The key is having full control of the chipset and integration with the phone.”

With that in mind, Xiaomi built the Surge S1, an eight-core, ARM-based processor that, while not exactly a powerhouse, can handle 4K video. More importantly, it’s fully integrated with the new Xiaomi 5C smartphone, which launched with the chip.

Xiaomi

Xiaomi reportedly spent $145 million developing the Surge S1 and has already reaped benefits. First and foremost, it allowed Xiaomi to offer a phone right now— the Snapdragon 835 won’t appear until sometime in April with the launch of the Samsung Galaxy S8. Chan says the chip gives the company more control over when it pushes Android updates to customers. And there are other areas to explore. Huawei, for instance, figured out how to squeeze a few days of battery out of its Keira 960 chip. What makes all of this so fascinating is it almost certainly couldn’t have happened even a few years ago.

“What’s made it possible is intellectual property from ARM, and an improvement in the tools to design, develop, and take an SoC to a [fabrication plant] to go build it,” says Moorhead. Specifically, in recent years ARM introduced a program called Artisan, which provides something like an off-the-shelf intellectual property buffet. It’s easier than ever to build a processor operation from scratch—a major reason why it only took two years to go from urge to Surge.

None of which necessarily makes any of this a good idea.

Risky Business

Apple’s success with the iPhone and its AX processors underscores how much can go right for companies that invest in developing their own silicon—but also belies how much can go wrong. “Unless you acquire an existing chip maker or designer you're going to be worse at this than established chip makers,” says Dawson.

That doesn’t just mean potential performance issues, though those are certainly possible. “Imagine if you messed up a chip and you’ve got to do a metal layer spin,” says Moorhead, referring to a step in semiconductor fabrication. “That could mean 90 days added to your schedule.”

Then there’s compatibility, which creates the potential for pitfalls both specific and broad. A brand new chipset could create performance issues for individual apps. And big-picture features can remain beyond reach—Qualcomm, for example, builds the only chips with the muscle to handle Google’s ambitious Daydream mobile VR platform. That will likely be true of the next big breakthrough as well. “You run the risk of missing a major inflection point,” says Moorhead.

That’s why the Surge S1 launches, at least, mostly as a hedge. Xiaomi says it remains committed to working with Qualcomm and its other parters, and vice versa. “We have a strong relationship with Xiaomi and will continue to collaborate to bring the latest technology features to mobile devices around the world,” says Qualcomm spokeswoman Tara Sims.

How strong that relationship remains likely depends on the success Xiaomi finds with the Surge S1 and its successors. Chan says the company doesn’t expect a full return on investment until “much later on.” The company can't achieve the same cost savings through scale that a company like Samsung can, because it doesn't have the same breadth of products—the connected dishwashers and such—to plop chips in.

But if Xiaomi’s gambit pays off, it raises the intriguing possibility that smartphones of the future won’t just be better. They’ll be different. They’ll offer options beyond screen size and and finish. After all, there’s no better feature than choice.