Intel will invest roughly $1.5 billion in a holding company that will own Spreadtrum Communications and RDA Microelectronics. The California chip giant will own about 20% of the company, a joint venture with China’s Tsinghua Unigroup. Tsinghua Unigroup is a state-owned limited liability corporation funded by Tsinghua University in China.
Spreadtrum, a Chinese maker of mobile chipsets, has won significant market share in recent months. This summer, Spreadtrum replaced Intel as the No. 3 maker of cellular baseband processors, according to Strategy Analytics. The top two vendors are Qualcomm and Taiwan’s MediaTek. MediaTek and Spreadtrum have both been highly successful supplying chipsets for smartphones that are made and sold in China.
“Clearly, Intel realizes that it was going nowhere in the cellphone chip market with its current approach,” said analyst Will Strauss of Forward Concepts. “It was unable to get its LTE chips into any cellphone.” Lenovo has used Intel chips in some 3G smartphones, and Strauss thinks the new partnership will open up the LTE market.
“I think the approach will get X86 chips into more China-specific LTE cellphones,” he said. “It now has a credible partner that has a significant presence in the world’s largest cellphone market: China.”
“China is now the largest consumption market for smartphones and has the largest number of Internet users in the world,” said Brian Krzanich, Intel CEO. “These agreements with Tsinghua Unigroup underscore Intel’s 29-year-long history of investing in and working in China. This partnership will also enhance our ability to support a wider range of mobile customers in China and the rest of the world.”
Intel said the purpose of its agreement with Tsinghua Unigroup is to expand the product offerings and adoption for Intel-based mobile devices in China and worldwide by jointly developing Intel architecture solutions for mobile phones. Currently, most mobile phones use chipsets based on ARM’s architecture, which has traditionally consumed less power.
Both Spreadtrum and RDA Microelectronics are fabless semiconductor companies, meaning they do not own foundries. Intel owns a custom foundry.
