Xiaomi CEO and chairman Lei Jun. Xiaomi

Chinese smartphone giant Xiaomi is putting more money into artificial intelligence (AI) and virtual reality.

The company has signed a deal with Nokia that allows the two companies to use each other's patents. The agreement mostly focuses on network infrastructure kit and datacentres — but the two firms have also "agreed to explore opportunities for further co-operation", specifically the internet of things, augmented and virtual reality, and artificial intelligence. We first saw the deal reported on CNBC.

Xiaomi's CEO Lei Jun has already been vocal this year about the company's investment in AI. According to a report from the Android Headlines site, Lei Jun said he had boosted the company's AI team by 50%, though he didn't say what they were working on. He first announced an AI lab in March this year, according to FirstPost. And the company launched a smart speaker assistant, Kuri, in January.

On the virtual reality front, Xiaomi released a new low-cost Mi VR headset late last year.

Xiaomi's Mi VR headset Xiaomi

According to May data from CounterPoint research, Xiaomi is bigger than Samsung in China, and the fifth biggest smartphone maker in the country. The company sells low-cost Android phones under the "Mi" brand. But unlike its homegrown competitor Huawei, the company hasn't expanded outside Asia. And while it was once the leading smartphone brand in China overall, it has fallen behind faster growing rivals like Oppo and Vivo.

Further expansion is an obvious way to counteract that trend. A Xiaomi spokesman told CNBC that the Nokia deal was a stepping stone towards global expansion, but didn't give specifics.

Lei Jun said in a statement: "Xiaomi is committed to building sustainable, long-term partnerships with global technology leaders.

"Our collaboration with Nokia will enable us to tap on its leadership in building large, high performance networks and formidable strength in software and services, as we seek to create even more remarkable products and services that deliver the best user experience to our Mi fans worldwide."