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Intel backs 2 Chinese chip firms
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INTEL Corp said it will pay as much as US$1.5 billion for a 20 percent stake in two mobile chipmakers with ties to the Chinese government, in the hopes of catching up in a smartphone chip industry dominated by rival Qualcomm Inc.
Intel will acquire the stake in Spreadtrum Communications and RDA Microelectronics through a deal with Tsinghua Unigroup, a government-affiliated private equity firm which owns the two mobile chipmakers.
The US semiconductor company, more known for chips used in personal computers, has struggled to gain traction in the smartphone and tablet market. The landmark deal would give Intel a greater foothold in the Chinese mobile chip market, which has become a nexus of the global smartphone industry.
Conversely, the deal would provide the two Chinese chipmakers support from a US semiconductor giant on chip design and development, an area deemed to be of vital strategic importance by the Chinese government.
“It has become a national priority of China to grow its semiconductor industry,” said Tsinghua Unigroup Chairman Zhao Weiguo in a statement released by Intel yesterday.
Confidence in market
“The strategic collaboration between Tsinghua Unigroup and Intel ranges from design and development to marketing and equity investments, which demonstrate Intel’s confidence in the Chinese market and strong commitment to (the) Chinese semiconductor industry.”
Speculation of the deal has been rife in the Chinese press for several weeks. Intel’s stake will be via a newly created holding company that owns the units Spreadtrum Communications and RDA Microelectronics, Unigroup said, adding that the deal is still waiting for government approval.
Unigroup is controlled by the prestigious Tsinghua University in Beijing.
The government in Beijing has said in published policy papers that it views semiconductors as an industry of vital strategic importance and hopes to spur its development domestically.
Since Brian Krzanich took the helm last year, Intel has pursued an array of deals and strategies to ensure its chip technology gets into more smartphones and tablets. The newest investment comes less than six months after Intel reached a deal with Chinese chip maker Rockchip to make inexpensive tablet chips with Intel’s architecture and branding.
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