Qualcomm, Datang Telecom Group and investment company Beijing Jianguang Asset Management (JAC) are set to launch a joint venture to build low-cost chips for entry-level smartphones, Digitimes reported.

Citing reports in the Chinese language Economic Daily News, the publication said the joint venture was expected to launch during Q3 and would compete with Mediatek and Spreadtrum Communications to supply chips for the lower end of the smartphone market.

Qualcomm will be the “technology leader” on the project, which will develop smartphone chips for under $10. Semiconductor company Datang and JAC will hold a combined share of 50 per cent in the new venture.

The company is expected to operate out of China and will be limited to the production of chips not directly competing with Qualcomm’s existing portfolio aimed at higher-end devices.

Reports surfacing this week are not the first time Qualcomm and Datang have been linked with a partnership. In May 2016, speculation surfaced the pair were in talks on a joint venture, with limited details available on the specifics of the proposed arrangement. The reports were denied at the time by Datang.