Qualcomm announces joint venture with provincial government in China

Qualcomm Inc and the provincial government of Guizhou in southwest China yesterday launched a $280-million joint venture for the design, development and sale of advanced server technology, with the US chipmaker deepening its Chinese relations.

The company's officials in Beijing signed a strategic cooperation agreement with the government of Guizhou province and announced the Guizhou Huaxintong Semi-Conductor Technology Co Ltd, a joint venture with initial capital of 1.85 billion renminbi.

Qualcomm would also establish an investment company in Guizhou that would serve as a vehicle for future investments in China, according to a statement by the company and the provincial government.

According to Derek Aberle, president of Qualcomm Inc, the joint venture cooperation agreement and formation of an investment company come as important steps for Qualcomm as it deepens its cooperation and investment in China.

He added, in addition to its capital investment, Qualcomm was licensing its server technology to the joint venture, assisting with research and development and would supply expertise to implement the project.

"This underscores our commitment as a strategic partner in China," Aberle said in the statement.

The chip maker would own 45 per cent in the joint venture, Guizhou Huaxintong Semi-Conductor Technology, which would be owned 55 per cent by the Guizhou provincial government's investment arm. The initial joint venture would have a registered capital of about $280 million.

In October last year, Qualcomm revealed plans to enter the server CPU market dominated by Intel, with a customer processor chip built using the ARM architecture.

It added in November that it would co-develop the technology with local Chinese companies.

According to commentators, like many other US tech companies, Qualcomm appeared to want to leverage partnerships with local companies for easier access to the Chinese market.