It’s no secret that Intel Corporation (NASDAQ:INTC) is making a concerted effort to develop its mobile chip making capability. These plans of the chip maker align well with the Beijing government’s intention of developing a serious domestic challenger to the likes of Qualcomm and Samsung, according to a report from Reuters. The common goals were highlighted recently, when Intel invested up to $1.5 billion in two fast-growing Chinese mobile chip makers.
Beijing needs a partner to develop local players
The industrial policy of China has been targeting the design and manufacturing of semiconductors for more than a decade. This activity has increased over the past year as the country has initiated a number of cross-border mergers and co-operation deals. “We’ve entered an inflection point where government policy has started to work – it’s started to help the local semiconductor industry,” Nomura analyst Leping Huang noted recently.
The largest number of smartphones in the world are manufactured and consumed by China, but the country is highly dependent when it comes to chip making as the country has to procure the large majority of its chips from other countries. By the same token, the country is highly dependent on imported processors for powering the latest devices. China imports most of its processors from San Diego-based Qualcomm, South Korea’s Samsung Electronics Co. or MediaTek of Taiwan.
China also wants to ramp up its chip manufacturing abilities for national security reasons. Revelations about the U.S. NSA surveillance program Prism has forced Beijing to make efforts to boost the security of its information technology industry.
Intel to benefit
Intel has bright prospects in China after finalizing of the deal in early August. The chip maker is sure to benefit as China is the biggest market in the smartphone industry. The deal will also assist Intel in its efforts catch up to with the leading mobile chipmaker Qualcomm Inc.
The Intel/China deal has been blessed by the deputy chief of China’s Ministry of Industry and Information Technology (MIIT), Yang Xueshan, who visited with Intel’s CO during a recent trip to China. Intel gets a 20% stake in Spreadtrum Communications and RDA Microelectronics as part of the agreement that was unveiled on September 26. Intel also has shares of a Tsinghua University holding company where an agreement has been signed with the aim of developing and marketing smartphone chips.
Intel was behind the curve in recognizing the mobile revolution, but the firm now has an opportunity to get on board as major mobile chip player with the Tsinghua deal.