Intel Corporation (NASDAQ:INTC) is collaborating with Chinese chip maker Fuzhou Rockship Electronics Co. to manufacture Intel-branded chips to power entry-level Android tablets. According to the Silicon Valley giant, the companies will jointly develop the mobile chips.
In a conference call, Intel CEO Brian Krzanich said, “They’re absolutely bringing us speed and execution and proliferation for us that would not otherwise get done.”
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Intel aims to boost SoC
The chip maker has once again restated the fact that it will follow an unusual strategy to catch up to competitors in key markets. Before this collaboration, there were very few occasions when Intel made chips by combining its own technology with circuitry designed by others.
Rockchip and Intel Corporation (NASDAQ:INTC) will manufacture quad-core mobile chips using Intel’s architecture and branding. Intel has an edge over all other companies when it comes to chip manufacturing for laptops and desktops, but it has relatively less experience in designing “system on chips,” or SoCs, that combine features like modems, wifi and memory.
Fuzhou, on the other hand, is an expert in SoC smartphones and tablets. Those chips typically include ARM processor technology that competes with Intel’s technology.
Escalating tension between U.S. and China
This collaboration between the U.S. and a Chinese company is announced when there are escalating tensions between the regions. Recently, the U.S. Justice Department alleged five officers in China’s People’s Liberation Army had been stealing American corporate secrets.
Krzanich is confident that the dispute between two nations will not affect the relationship with Rockchip, and the deal offer entree to many customers in China to rapidly expand Intel Corporation (NASDAQ:INTC)’s portfolio of mobile chips.
Smartphone and tablet manufacturers have adopted ARM technology to power their devices, ignoring Intel for over a decade. Rockchip has also used ARM technology in its own chips, carving out a substantial niche in tablet chips from bigger competitors like Qualcomm Inc. Brian Krzanich,Intel Corporation (NASDAQ:INTC)’s chief executive, has aimed to integrate Intel chips into 40 million tablets this year. In the first quarter, the company has achieved 5 million units.
The North American mobile market is almost saturated, and sales of high-end mobile devices are declining. Manufacturers have acknowledged this, and are now focusing their attention on lower-end tablets and smartphones designed for consumers in China and other emerging markets.