Megachip maker Intel has decided that the only way to get around the inscrutable Chinese is to invest in shed loads of scrute and buy its way into the market.
Intel is pouring billions of dollars into expanding its influence in China, where fewer than half the country’s roughly 500 million mobile phone users have smartphones and the market is ruled by Qualcomm.
Intel is apparently trying to use its relationship with PC clients in China as a foot in the door to mobile devices. It is chummy with Lenovo, the No. 1 global PC seller, and its hardware powers a handful of Lenovo smartphones. It is also mates with Chinese internet giant Tencent, which includes a joint research centre, helps ensure that the WeChat maker’s software works smoothly with Intel chips.
Intel paid $1.5 billion in September for a 20 percent stake in state-run Tsinghua Unigroup, which controls two domestic mobile chipmakers. It did not need to spend that much, in some observers thought that it was double the outfit’s value. In December, Intel said it would pay $1.6 billion to upgrade its factory in the central Chinese city of Chengdu, which cost $300 million to build a decade ago. The plant, designed for back-end testing, will absorb some of the work previously done in a shuttered Costa Rican facility.
That appears to suggest that Chipzilla is shifting a lot of its tech to China. The idea being that it will intergrate itself into the local supply chain and impress the Chinese officials, who are having a few problems with Qualcomm. Intel may be more favorably treated by Chinese regulators because of its stake in Tsinghua Unigroup—as well as its willingness to build high-end local labs. So far, Intel hasn’t been touched in China’s crackdown on foreign companies.
The next battle is believed to be for wearable tech and if Intel has invested in Chinese start-ups it might have a leg-up and a way to make these as cheap as possible.
