Xiaomi Corp unveiled its latest artificial intelligence-enabled smartphone on Tuesday, as the Beijing-based company stepped up efforts to consolidate presence in the premium segment.

The move came after the Chinese smartphone vendor inked a deal with Microsoft Corp to deepen cooperation in AI, cloud computing and laptops.

Xiaomi, best known for its quality handsets at affordable prices, is working hard to boost its brand image and making a bigger push into AI in the hope of outcompeting rivals such as Huawei Technologies Co Ltd.

Lei Jun, CEO of Xiaomi, said AI technologies, which have made strides in the past three years, are the main driver for innovations on smartphones.

"AI enables smartphones to shoot far better pictures," Lei said. That is exactly what Xiaomi emphasized about its new smartphone MIX 2S.

The model, powered by Qualcomm Inc's processor Snapdragon 845, comes with dual-cameras on the rear. It can automatically recognize 25 objects when consumers use it to take photos and it can adjust camera settings in accordance with different environments, the company claimed.

Priced up to 3,999 yuan ($637), MIX 2S is equipped with its homegrown voice-activated virtual assistant, which can help consumers control Xiaomi-branded smart home appliances via voice.

The new handset is Xiaomi's latest push to make inroads into the high-end segment. In February, the company inked a deal with Microsoft. The US tech giant will leverage its prowess in AI and cloud services to combine with Xiaomi's strength in smart devices to create better products.

James Yan, research director with Counterpoint Technology Market Research, said global smartphone vendors are all putting huge emphasis on photo-taking abilities, as innovation becomes increasingly harder for a mature industry.

"This is probably the best photo-taking smartphone Xiaomi has made. It highlights Xiaomi's progress in the area," Yan said.

The move also came as Xiaomi scrambles to prepare for an initial public offering, which reportedly values the company at around $100 billion.

After a struggling 2016, the eight-year-old company resumed robust growth last year partly by building brick-and-mortar retail outlets to reach Chinese consumers in small cities.

Lei said the company has already opened more than 300 offline stores.

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