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Intel investing $US1.5 billion in two Chinese chip firms

Intel investing $US1.5 billion in two Chinese chip firms

Intel is targeting China's booming mobile market

Intel is investing 9 billion yuan ($US1.5 billion) in two Chinese chip companies with an eye to boosting its presence in the country's booming mobile phone market.

The two fabless semiconductor companies develop mobile chipset platforms for smartphones, feature phones and other consumer electronics products, which support 2G, 3G and 4G wireless communications standards, Intel said Friday.

The U.S. chipmaker will acquire a minority stake of about 20 percent in a holding company which will own the chip firms - Spreadtrum Communications and RDA Microelectronics.

The two chip companies have links to the state. The holding company, in which Intel is investing, is being set up under Tsinghua Unigroup, an operating subsidiary of Tsinghua Holdings, which is a solely state-owned company funded by Tsinghua University in China. Tsinghua Unigroup said in July it had acquired RDA for $907 million.

The agreement with Tsinghua Unigroup involves the design and selling of Intel architecture-based system-on-chips (SoCs). The initial products will be available in the second half of next year.

Intel CEO, Brian Krzanich, said in a statement that China is now the largest consumption market for smartphones and has the largest number of Internet users in the world. "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."

Intel's rival Qualcomm is being investigated in the country. The country's National Reform and Development Commission started investigating the company in November following industry complaints that the company has been overcharging its clients to use its patents.

The investment by Intel is subject to regulatory approvals and other closing conditions and is expected to close by early next year, Intel said.

Intel has been making strategic moves to expand its presence in China. In May it tied with Rockchip in Fuzhou to develop an Intel-branded mobile SoC platform. The quad-core platform is being built around an Intel Atom processor core integrated with Intel's 3G modem technology. In February, its venture capital arm, Intel Capital, invested in three Chinese cloud providers and has shown interest in local companies that make components for wearables.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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