the question is, what kinda loopholes are they jumping through to make this legal?
I'm not sure it's illegal. It would really depend on where the end products - in this case, the tablets or other devices that wind up with Cherry Trail chips in them - are sold. If Xiaomi keeps their el cheapo devices restricted primarily to the Chinese market and various Asian markets, it might not ruffle too many of the right feathers to upset anyone.
Furthermore, it's a BOGO deal since Intel has to sell them a "laptop processor" - probably mobile Skylake- per CT. So I'm not sure if regulators would see it as manipulation of sales/shipping numbers, market manipulation (selling below cost), or what. BOGO deals go mostly unnoticed from an competition/anticompetition perspective in retail space, often due to the fact that BOGO deals are associated with a slightly higher unit cost for the non-free item one must purchase to get the free premium. For example, if I offer you a free can of
Great Looking Hair when you buy some piece of junk I'm selling in an infomercial, I'm probably raising the price of the piece of junk (or the shipping) to cover the cost of the GLH.
In the case of the Intel/Xiaomi deal, it's not clear that the price of "laptop processors" is being adjusted at all to account for the extra CT hardware that Intel is kicking in for free. It might not matter.
What is clear is that Intel is still going to be subsidizing the cost of any device using one of Xiaomi's freebie CTs, so the tablet market gets dumped on again. It's a great time to be a cheap tablet hunter.
Well, if they want to upset any "apple" carts, they are going to have to do a helluva lot better than atom laptops.
See above, Xiaomi is probably not going to be using these Atoms in laptops . . . to get the free CT Atoms, they have to buy something more substantial.