Intel Corp. said it will invest $1.5 billion in two Chinese chipmakers, Spreadtrum Communications and RDA Microelectronics, as it looks to gain ground on rival Qualcomm in the mobile market.
Intel will take a 20 percent stake in the Tsinghua Unigroup, a government-affiliated private equity firm that owns the companies, the second- and third-largest chip designers in China, respectively.
The American semiconductor company is better recognized as a maker of chips used in personal computers, but that market has been slowing for years and mobile is booming. In a statement, Tsinghua Unigroup said the partnership would benefit China's chip industry by giving it access to new markets.
“It has become a national priority of China to grow its semiconductor industry,” Tsinghua Unigroup Chairman Zhao Weiguo said in a statement released by Intel Friday. “The strategic 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.”
Intel stock has risen by 32 percent this year, with CEO Brian Krzanich, who took over the company last year, pursuing a number of opportunities related to smartphones and tablets. He’s also entered into partnerships with fashion companies like Fossil group and Opening Ceremony with the aim of designing smart clothing.
“Intel’s new CEO has proven to be willing to take on new partnerships and approach new business opportunities that stray from prior conventions,” Suji Da Silva, an analyst at Topeka Capital Markets, told Reuters before the announcement. “They should do as much of this as they need to [to] be in markets that are important to them.”