Intel is taking its battle to be a leader in the mobile semiconductor space to China, where the US firm has invested in two Chinese mobile silicon players.
The investment, which was approved by the Ministry of Industry and Information Technology in late September, will put Intel in more direct competition with the world’s leading mobile chipmakers Qualcomm and Samsung.
Intel announced it was investing up to $1.5 billion for a 20 per cent stake in Tsinghua Unigroup, which controls Spreadtrum Communications and RDA Microelectronics. Unigroup, a government-affiliated private-equity firm controlled by Tsinghua University in Beijing, acquired the two companies a year ago for $1.7 billion and $900 million respectively.
Intel’s move is of course being welcomed by Chinese authorities since it means the country has a clearer path to becoming less dependent on imported chips. The country is the largest maker of mobile phones in the world but sources the majority of the chips and processors from Qualcomm, Samsung and MediaTek.
China’s antitrust authorities have stepped up their investigations of foreign tech companies since early 2013, with probes targeting Qualcomm and more than 30 other companies.
The National Development and Reform Commission (NDRC) has been investigating Qualcomm since last November over its patent licensing and pricing practices. Authorities ruled in July that Qualcomm has a monopoly in the country. However, it is not clear whether the NDRC has concluded that the chipmaker is abusing its dominant position.
Chinese officials have indicated off the record that the real issue behind the probe is that Qualcomm’s royalties on intellectual properties are comparatively higher in China than other countries. China accounts for almost half of Qualcomm’s total revenue, which was $25 billion in its last fiscal year.
With just 27 per cent of the $150 billion in chips used in domestic production last year, Beijing is keen to see a strong domestic semiconductor manufacturer develop to compete with the world leaders.
Reuters said the State Council has set a target for the semiconductor industry to grow at least 20 per cent annually, with revenue rising from CNY41 billion in 2013 to CNY350 billion by 2020.