Boston, MA 09/26/2014 (wallstreetpr) – Intel Corporation (NASDAQ:INTC) has decided to take its chip business to another level. Recently, it announced that the company intends to pay $1.5 billion amount for 20% stake in two Chinese mobile chip-making companies. With this action, Intel hopes to take on its competitor in the market, QUALCOMM, Inc. (NASDAQ:QCOM).
Intel’s Stake in Chinese Chip Companies
Rda Microelectronics Inc (ADR) (NASDAQ:RDA) as well as Spreadtrum Communications, Inc (ADR) (NASDAQ:SPRD) are the two companies in which Intel Corporation (NASDAQ:INTC) intends to acquire stake by way of its deal with Tsinghua Unigroup. The latter most is a private equity Chinese firm and is affiliated to the Government. Tsinghua Unigroup is also the owner of the aforesaid chipmakers.
Attempt to Create a Strong Base for Tablet and Smartphone Market
Intel Corporation (NASDAQ:INTC) has so far been known for personal computers’ chips. However, it has not managed to gain attention in the tablet or smartphone business. Therefore, the deal with Tsinghua Unigroup is seen as something that will help it in establishing its foothold in mobile chip market of one of the largest economies of the world. The Chinese market is a nexus for the smartphone industry on a global level.
Benefit to Two Chinese Mobile Chipmakers
Also, the association withIntel Corporation (NASDAQ:INTC) will help the two companies in China to get development and design assistance for chip-making, from Intel. This will be considered as one of the most imperative steps or the Government in China, which will see it as a deal of strategic importance.
In this regard, Zhao Weiguo, the Chairman of Tsinghua Unigroup, said that growth of the semiconductor industry is a national priority for the country. Zhao Weiguo added that the deal will be a strategic collaboration and will include not just the development and design, but also equity investments and marketing.
Although the media in China was speculating the deal from past few weeks, the confirmation about the same was given today by Reuters.
