In a move to tap into the vast opportunities in China’s technology industry, Intel plans to invest as much as $1.5 billion for a minority stake in a holding company there. Intel is acquiring 20 percent of a Tsinghua Holdings operating subsidiary to execute its mission.
Tsinghua is a solely state-owned limited liability corporation funded by Tsinghua University in China. By partnering with Tsinghua, Intel aims to expand the product offerings and adoption for Intel-based mobile devices in China and around the world. The holding company in which Intel is investing is under Tsinghua Unigroup and will own fabless semiconductor companies Spreadtrum Communications and RDA Microelectronics.
“China is now the largest consumption market for smartphones and has the largest number of Internet users in the world,” said Brian Krzanich, CEO of Intel. “These agreements with Tsinghua Unigroup underscore Intel’s 29-year-long history of investing in and working in China. This partnership will also enhance our ability to support a wider range of mobile customers in China and the rest of the world by more quickly delivering a broader portfolio of Intel architecture and communications technology solutions.”
Forwarding China’s Industry
To reach Intel’s goal, the companies will jointly develop Intel Architecture and communications-based solutions for mobile phones. The companies will roll out mobile chipset platforms for feature phones, smartphones and other consumer electronics devices that support 2G, 3G and 4G wireless communications specs.
Zhao Weiguo, chairman and president of Tsinghua Unigroup, said growing the semiconductor industry in China has become a national priority. As he explained it, the collaboration between Tsinghua Unigroup and Intel ranges from design and development to marketing and equity investments, “which demonstrate Intel’s confidence in the Chinese market and strong commitment to Chinese semiconductor industry.”
Weiguo expects the partnership to accelerate the technology development and strengthen the competitiveness and market position of Chinese semiconductor companies. Under the terms of the agreement, Spreadtrum Communications will jointly create and sell a family of Intel Architecture-based system-on-chips (SoCs). The first wave of products will come to market during the second half of next year. Both companies will sell the Intel Architecture-based SoCs.
An Aggressive Strategy
Rob Enderle, principal analyst at the Enderle Group, is not surprised Intel is making bold moves into China. China, he told us, is the fastest-growing market in the world and largest for smartphone devices.
“These devices represent the greatest threat to Intel’s market position and success. Intel is doing everything they can to make sure China switches from being a liability to an asset, and this deal is part of their aggressive strategy,” Enderle said.
“To be successful in China you have to be in China but, because of tensions between the U.S. and China, you have to be creative in how you get there. This is Intel’s creative solution to their China problem and it was nicely played.”
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