By Wayne Ma
Intel Corp. forged its second alliance with a major low-cost
Chinese chip maker Friday through a $1.5 billion investment,
highlighting the Silicon Valley giant's new strategy of teaming up
with rivals in its quest to crack the mobile market.
The Santa Clara, Calif.-chip maker said it would buy about 20%
of China's Tsinghua Unigroup Ltd., a state-owned firm that owns
China's second- and third-largest chip designers, Spreadtrum
Communications and RDA Microelectronics. The purchase follows
Intel's announcement in May of a partnership with another
up-and-coming Chinese chip maker Fuzhou Rockchip Electronics
Co.
Intel has redoubled efforts to expand its limited presence in
the smartphone and tablet markets this year as growth slows in the
traditional personal-computer market. After making little headway
against low-cost chip providers that dominate the mobile sector,
Intel began this year to seek its Chinese rivals out for
partnerships as it set a target of putting its technology in 40
million tablets before year's end.
Intel President Renee James told The Wall Street Journal in an
interview earlier this year that the company realized it needed
partners to help it meet the needs of customers in emerging markets
and adapt to the rapid production cycles in the Chinese market.
Chinese chip makers have been early adapters of the so-called
"turnkey solution," in which they sell a whole device template to
manufacturers along with the chip, resulting in low production
costs and rapid turnaround times.
Intel's alliance with Tsinghua could prove strategic for a
state-owned firm with larger government ambitions behind it. Until
recently a low-key company funded by Tsinghua University in
Beijing, Tsinghua has made big moves in the chip sector in the past
year, announcing purchases last year of two major Chinese chip
designers, Spreadtrum for $1.78 billion and RDA for $907
million.
China's Ministry of Industry and Information Technology has
stated its goal of forging a globally competitive semiconductor
industry, although its technology still lags behind. The government
announced in December it would pour $5 billion into the sector to
fuel mergers and enhance production facilities.
Intel said Friday the two companies would jointly develop
Intel-based chips for mobile phones for China and other
markets.
Chief Executive Brian Krzanich said in a statement that the
partnership would help Intel in "more quickly delivering a broader
portfolio of Intel architecture and communications technology
solutions."
Tsinghua Unigroup, a unit of Tsinghua Holdings Co. Ltd., said
the partnership would include product design, development and
marketing, and would benefit China's chip industry.
Tsinghua Chairman Zhao Weiguo called the development of China's
semiconductor industry "a national priority" in a statement, adding
that Intel's investment would "accelerate the technology
development and further strengthen the competitiveness and market
position of Chinese semiconductor companies."
The companies expect Intel's investment to close in early 2015,
and it is subject to regulatory approvals.
Write to Wayne Ma at wayne.ma@wsj.com
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