In a move that could significantly change the shape and global power structure of mobile chipmakers, Intel made a move to take a 20% stake in two chipmakers. The mobile chipmakers are based in China, and have significant ties to the Chinese government.
The goal: Catch up to a company in Qualcomm, which dominates the market currently.
The two companies that Intel will be investing in are Spreadtrum Communications and RDA Microelectronics. The deal is being orchestrated through Tsinghua Unigroup, which isn’t only affiliated with the government, but the firm that actually owns the two chipmakers.
Intel is widely known for their chips used in personal computers, like desktops, laptops, and other desk based devices. However, as the market shifts mobile, the company continues to lose money, and market share – and that’s something that they’ve already lost a great deal on over the last several years.
As was evident with the release of the iPhone 6 release, China is a big deal in the tech world. Especially when you’re talking about mobile computing. Specifically, mobile phones dominate in the Chinese market – and is typically the strongest market for almost any mobile device.
Also, China is where a great deal of the products – whether they be components, or the devices themselves – are mostly produced.
China sees a lot of value in working with outsiders in the chip development realm, as well. They currently own the mobile chip making market. However, that does not guarantee future success. The government in Beijing sees it as a crucial part of their continued technological development, to harbor the development of chip technology.
However, Intel isn’t just investing in development. They’re also investing in the equity portion of the companies, and according to Tsinghua Unigroup – that is a positive sign. It’s proof that the company isn’t just willing to come to China, but that the company is confident in the Chinese market as a whole.
While the government in China goes through its approval process, the Tsinghua Unigroup was noted to be controlled by Tsinghua University. China’s President Xi Jinping is recognized as alumni of the university, and chip making has been a serious part of what the government calls “vital strategic importance,” for some time now.