Qualcomm sets up joint venture in China for server chips

The joint venture will be set up with the Guizhou provincial government

Qualcomm is setting up a server chipset design and sales unit with a provincial government in China, a move that could help boost the company's bid to diversify from mobile chips into the server chips market.

The chip maker will own 45 percent in the joint venture, Guizhou Huaxintong Semi-Conductor Technology, that will be 55 percent owned by the Guizhou provincial government's investment arm. The initial registered capital of the joint venture will be about US$280 million.

Qualcomm revealed plans in October last year to enter the server CPU market that Intel dominates, with a customer processor chip built using the ARM architecture. It said in November that it would co-develop the technology with local Chinese companies.

Like many other U.S. tech companies, Qualcomm appears to want to take advantage of partnerships with local companies for easier access to the Chinese market. Hewlett-Packard sold a majority stake in its server, technology services and storage business in China to a Tsinghua Holdings subsidiary to boost sales of HP's enterprise products in the country, while Intel said in 2014 it was planning to invest in local chip companies for the design of mobile phone chips.

The Qualcomm server chips joint venture will be registered in Guian New Area, Guizhou, with operations in Beijing. Qualcomm will license its server chip technology and provide research and development processes to the joint venture. Besides the joint venture, it will set up an investment company in Guizhou that will "serve as a vehicle for future investments in China," Qualcomm said Sunday.

Qualcomm has previously announced collaborations in China, including for the local production of its Snapdragon mobile processors by Semiconductor Manufacturing International Corporation. China has shown interest in developing its own semiconductor industry.

The company has also had problems in China. In February last year it said it had settled with China's National Development and Reform Commission in connection with the agency's investigation of Qualcomm under the country's anti-monopoly law, including by agreeing to pay a fine of about $975 million to the NDRC.

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