Intel announced it would spend up to $1.5 billion to purchase a 20 percent stake in Tsinghua Unigroup in China in a move the company said will help it sell chips to Chinese smartphone makers. According to the Wall Street Journal, Tsinghua Unigroup is a state-run company that owns China's second- and third-largest chip designers, Spreadtrum Communications and RDA Microelectronics.
This is Intel's second major move into the Chinese market for smartphone chips. The company earlier this year announced a strategic relationship with Rockchip in China to accelerate and expand its system-on-a-chip roadmap for the value and entry-level tablet market segment.
Intel said its investment into Spreadtrum and RDA would "expand the product offerings and adoption for Intel-based mobile devices in China and worldwide by jointly developing Intel Architecture and communications-based solutions for mobile phones." The transaction is expected to close early next year.
"China is now the largest consumption market for smartphones and has the largest number of Internet users in the world," said Brian Krzanich, Intel's CEO, in a statement. "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."
In July, Intel said its mobile business continued to bleed cash and its wireless-related revenue declined significantly in the second quarter, even as the company as a whole reported strong earnings for the period. The company said though it is making progress toward its goal of shipping its chips inside 40 million tablets in 2014--but it is currently losing money because it is paying OEMs to put its chip inside their tablets.
Intel's new agreements with Spreadtrum and RDA likely will aid the company's efforts to sell its chips to the likes of Huawei and other major Chinese phone makers.
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