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Intel invests $1.5 billion in Chinese mobile semiconductor companies

Intel has announced a $1.5 billion deal for a 20 percent share in two of China's biggest mobile chipmakers, Spreadtrum Communications and RDA Microelectronics.
By
September 26, 2014
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Intel still hasn’t found a way to break into the smartphone system-on-a-chip market in a meaningful way. ARM based SoC manufacturers are still riding high, thanks to their broad range of integrated solutions. In a bid to turn its mobile fortunes around, Intel has announced that it will be investing $1.5 billion into two Chinese mobile chip manufacturers. Putting the company right in the hub of mobile SoC development.

In exchange for this rather large sum of money, Intel is purchasing a 20 percent state in two mobile chipmakers, Spreadtrum Communications and RDA Microelectronics. The stake will be made through Tsinghau Unigroup, a private equity firm that owns the two chip companies and is affiliated with the Chinese government.

“China is now the largest consumption market for smartphones and has the largest number of Internet users in the world,” – Brian Krzanich, Intel CEO

Spreadtrum is one of several manufacturers well known for its specialized smartphone platforms. Its SoCs also power the low cost FireFox OS smartphones. But Intel isn’t just hedging its bets on further growth in these Chinese companies, it will also be using the purchase to spur development of its own mobile chips. The deal with Spreadtrum will see the two jointly create a range of Intel based chips for mobile, which could arrive in devices by mid-2015. The SoCs will be sold under Intel and Spreadtrum brands.

“The adoption of Intel’s architecture technology will enable us to accelerate the development of mobile SoCs that expand the breadth of our portfolio” – Dr. Leo Li, CEO of Spreadtrum

Earlier in the year, Intel agreed to a licensing deal with Chinese semiconductor company Rockchip, to accelerate the rollout of its Atom processor designs. These announcement mark a substantial change in Intel’s strategy, as the company has previously kept SoC development entirely internal. Intel has also recently opened up its cutting-edge factories to paying customers.

The Tsinghau Unigroup deal is still awaiting government approval, and is expected to go through sometime in early 2015. Intel is optimistic about the likelihood of the deal being approved, especially as the Chinese government is keen to expand its semiconductor industry. The backing of Intel would be another big step in securing China’s role as a key player in the global processor market.