Spreadtrum Communications and RDA Microelectronics could soon see a major investment deal, according to a report. Reuters recently reported that Intel is considering an investment in the two Chinese-government affiliated mobile chip vendors.

Intel officials would not comment on the report. According to the news agency, two anonymous sources said the investment "could be made through Tsinghua Unigroup, a government-affiliated private equity firm controlled by Tsinghua University in Beijing."

Tsinghua owns 51 per cent of Spreadtrum and RDA. Reuters said it was not clear how much Intel would invest in the companies.

"There are a lot of questions here, but it could be legit," Linley Group senior analyst Mike Demler told EETimes. "Spreadtrum's position in the Chinese cell phone market parallels Rockchip's position in tablets."

Intel struck a co-development deal with Rockchip this year for a 3G version of Intel's SoFia tablet processor. "When Intel gets SoFia in production, it will be a low-end processor, which is where both of these companies play," Demler said.

He expects Tsinghua Holdings to merge RDA with its Spreadtrum interests, following increased interest by the Chinese government in building fabless companies. Still, "as a straight-up investment, this doesn't make sense" for Intel. "The only return Intel could look for is if it gets Spreadtrum to push SoFia into its channel."

Intel hasn't had much success in the smartphone and tablet market, leading some analysts to suggest that the company exit mobile altogether. Julie Coppernoll, vice president of Intel's mobile and communications group, earlier reaffirmed its commitment to tablets and LTE in May, telling us that growth in Intel architecture will be one of the biggest in the mobile sector.

Among possible motivations for the deal, Intel and the Chinese fabless companies share common competitors in Qualcomm and MediaTek, which currently dominate the market for smartphone and tablet processors. In addition, the fabless companies could be customers for Intel's growing foundry business. Intel runs a fab in Dalian, China, but a supplier to the fab said it is running significantly under its capacity.

In a recent talk in Silicon Valley, Bill McClean, president of IC Insights, said China appears to be shifting its semiconductor strategy. It is now focusing on developing its fabless chip designers—a more cost-effective route to growth than expanding its fabs.

Historically, China has exerted pressure on overseas vendors to participate in its industrial goals through joint ventures as a condition for market access.

By: DocMemory
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