Microsoft and Xiaomi are expanding their partnership – working more closely together in AI, cloud computing and hardware.

Why it matters: After having dropped out of the mobile OS game, Microsoft is seeking other ways to remain important in phones, especially in China.

Where it started: The relationship between the two companies spans back to 2015 when Xiaomi began using Microsoft Azure to run its Mi Cloud service for smartphone users and in 2016 Xiaomi began pre-installing the Microsoft Office and Skype app for its Android-based devices.

One more thing: Xiaomi has also been considering expanding its phone business to the U.S. and a deal with Microsoft could help on the patent front.