Qualcomm Forms $280 Million Joint Venture With Chinese Province

Jan 20, 2016

1 min read

Qualcomm has formed a joint venture with Guangzhou province, touted as China’s upcoming hub for big data and cloud computing, in an attempt to extend their server chip business in the country. The venture will be worth 1.85 billion yuan (approximately $280 million USD).

The new semi-conductor company, Guizhou Huaxintong Semi-Conductor Technology Co. Ltd., will be 55% owned by Guizhou’s provincial government, while Qualcomm will hold the remaining 45%, they revealed at an event in Beijing on Sunday.

Qualcomm will also establish an investment firm in Guizhou, targeting further investments in China.

Intel currently holds a monopoly on the server chip sector in China, though they recently credited lackluster first quarter projections to caution in the Chinese market. While Qualcomm’s market share in server chips is comparably tiny, the new state-backed joint venture offers a potential fast-track to seizing some of Intel’s local business.

The new venture is also strategic in terms of Qualcomm’s relationship with the Chinese government. “The strategic cooperation with Guizhou represents a significant increase in our collaboration in China” said Derek Aberle, President of Qualcomm in a release.

“We are not only providing investment capital, but we also are licensing our server technology to the joint venture and assisting with R&D process and implementation expertise; this underscores our commitment as a strategic partner in China.”

Qualcomm scuffled with the government in the past over the country’s strict antitrust laws. Last February the company agreed to pay a $975 million USD fine, the largest in China’s corporate history, following a 14-month investigation.

Qualcomm continued to struggle with delayed patent payments into late 2015, but has started 2016 on a better note in Asia, sealing deals with Audi and Samsung, as well as launching a Singapore-based joint venture with Japan’s TDK Corp. to manufacture components for radio-frequency technology including robotics and drones.