Boston, MA 10/06/2014 (wallstreetpr) – Intel Corporation (NASDAQ:INTC) will not sit back and watch Qualcomm, Inc. (NASDAQ:QCOM) taking over all the opportunities in the mobile chip market. That is why INTC is calculating a move that will surprise Qualcomm. Intel is seeking a stake in two Chinese mobile chipmakers to boost its mobile campaigns. The two companies that Intel is targeting are government affiliates.
Intel Corporation (NASDAQ:INTC) announced plans to invest about $1.5 billion in Spreadtrum Communications, Inc. (SPRD) and RDA Microelectronics Inc. (RDA). The investment would give it a 20% stake in the businesses. The companies are controlled by Tsinghua Unigroup, which is a private equity firm with government affiliation. It owns the two chip businesses.
Control of Chinese mobile chip market
The move to take a stake in Spreadtrum and RDA Microelectronics is expected to help Intel Corporation (NASDAQ:INTC) to make major strides against rival Qualcomm, Inc. (NASDAQ:QCOM), which controls much of the mobile chip market. While INTC dominates the PC segments, it is largely lacking in the mobile space, which is one reason its financial performance and stock price have been weakened in the recent times.
The Chinese government is keen to grow the domestic semiconductor industry, and Intel Corporation (NASDAQ:INTC)’s acquisition of a stake in the government-back chipmakers appears to be a strategic calculation. The deal is also coming at a time when Qualcomm is facing antitrust claims in China, a development that could weaken its hold in the market if it is found to have violated the law.
Smarphone and tablets have created a lucrative business for chipmakers that have the technology to offer what device manufacturers require. Wearables are also emerging as a promising market for chipmakers. Intel Corporation (NASDAQ:INTC) has both the technology and good reputation in the chip making business, which comes as an added advantage as it enters into collaboration with the Chinese companies. Intel Corporation (NASDAQ:INTC) expects to finalize its deal with the two Chinese chipmakers early next year.