Albany, New York (09/29/2014) – Intel Corporation (NASDAQ:INTC) announced that it would spend approximately $1.5 billion by acquiring a stake in Tsinghua Unigroup Ltd. The company owns two Chinese chip designers and can boost Intel’s access in China market. It is a significant step as Intel is facing tough time to make a place in the chip industry. It will acquire a maximum 20% stake in Tsinghua Unigroup Ltd. The two chip designers owned by it are RDA Microelectronics Inc. and Spreadtrum Communications Inc out of which the latter will develop products with Intel. These products will be targeted to the domestic phone-manufacturing consumers.
The acquisition of the stake is the latest step taken by the CEO Brian Krzanich to get access into the chip industry. As of now, the industry is dominated by QUALCOMM, Inc. (NASDAQ:QCOM). It is the second association of Intel with a Chinese company. The objective remains the same i.e. to expand the use of mobile process in China where China Mobile Ltd. (ADR) (NYSE:CHL) has more subscribers compared to the population of the U.S.
The future ahead
Tsinghua Holdings Co. is funded by Tsinghua University, and it bought Spreadtrum in last December for approximately $1.7 billion. Intel acquisition of the stake in Tsinghua is a long-term strategic agreement which will provide it greater penetration in China’s market as well as in overseas markets where Chinese phone makers are expanding their product offerings and services.
It is an innovative strategy by Intel Corporation (NASDAQ:INTC) as most of the other companies are finding it hard to do business in China. In fact, Qualcomm is a target of an antitrust investigation conducted by the National Development and Reform Commission. Intel is also teaming up with Fuzhou Rockchip Electronics Co. to make a new product known as Sofia for mobile devices. China has the largest market for Smartphones. Also, it excels on the parameter of internet users in the world.