Intel Corporation (NASDAQ:INTC) bought 20% stake in a Chinese holding company that control developers of system-on-chips for smartphone along with other mobile devices as per the reports. Prime reason for the acquisition is believed to be the development of application processor for mobile powered by Intel’s x86 cores, which is expected to drive the market share of the x86 architecture in the smartphone industry.
Suspense over the deal
A report on Wednesday said Intel might have already purchased or it might be prepping to buy 20% stake in Tsinghua Unigroup, an operating subsidiary of Tsinghua Holdings, a solely state-owned limited liability corporation funded by Tsinghua University in China. The company paid $1.5 billion in cash for the stake, according to a report by Motley Fool.
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Motley Fool reports that Intel bought 20% stake in Tsinghua Unigroup, the controller of both Spreadtrum and RDA whereas Marbridge Daily is indicating that the company has acquired only 20% stake on Spreadtrum.
Only last week, the reports of Intel eyeing investment in Spreadtrum were revealed. The investment aims to convince the chip designer to opt for x86 cores over processing engines developed by ARM holdings. In order to ramp up its position in the smartphone industry, the chipmaker needs to promote its x86 architecture on the smartphone market.
Spreadtrum crucial for Intel
It is being widely expected that Spreadtrum would get the license of IA 32 and Intel 64 from the chip maker. Till now, only two companies, AMD and VIA have the license, which explains the significance of the deal. Both the parties will draw benefit from the deal as Intel will remove all barriers for Spreadtrum as it will get a direct access to the most advanced foundry and process technology. On the other hand, Intel is expected to earn some cash and increase its production capacity.
How the deal will benefit is still to be seen, but Spreadtrum has received a significant backing of the Chinese government, which will facilitate it to produce dies on a smaller node compared to those produced by TSMC, the largest contract foundry at present. Intel’s x86 architecture is a superb commodity, which is still to be exploited completely and used in the Mobile segment.