Qualcomm, Guizhou pledge $280m investment in server chips

A Qualcomm sign is pictured in front of one of its many buildings in San Diego, California November 5, 2014. [Photo/Agencies]

The United States company said it is building a 1.85 billion yuan ($280 million) joint venture in the less-developed southwestern province to produce server chips for the domestic market.

Named the Guizhou Huaxintong Semi-Conductor Technology Co, the joint venture will be 55 percent owned by the Guizhou provincial government's investment arm and 45 percent by a Qualcomm subsidiary.

Derek Aberle, president of Qualcomm, said the venture will focus on the design, development and sales of "advanced server chipset technology" in China.

The venture will be based at a technology park near Guiyang, the provincial capital.

As part of the deal, Qualcomm will also license its proprietary server chip technology and provide research and development processes to the venture, Aberle said at a news conference in Beijing.

Sun Zhigang, the acting governor of Guizhou, said the collaboration is a major step for China's semiconductor industry and will also assist Guizhou to set up a world-class chipmaking plant.

The collaboration will also help the province to build up its high-tech industries such as cloud computing and chipmaking, providing key ways for it to grow its economy in the coming decade.

"The partnership is a win-win deal for both Guizhou and Qualcomm," Sun said.

Xu Shaoshi, head of the National Development and Reform Commission, the country's top economic planner, said the partnership sets an example for cross-border technological innovation, the key to economic growth.

"China is open to foreign investment. … We welcome more overseas investment flowing into China, especially in the western part of the country," Xu said.

Wu Lianfeng, vice-president and chief analyst at research firm International Data Corp China, said more overseas technology companies are expected to set up joint ventures in China to gain access to highly profitable government procurement deals.