In the news: Qualcomm invests $280 million in China JV, Haier buys GE's appliance unit and local power plant approvals cause trouble
January 20, 2016 | BY
Katherine JoThis week Qualcomm inked a deal to develop server chips in Guizhou province, Haier proposed a $5.4 billion takeover of GE's appliance business and China's plan to give local governments the authority to approve projects backfired
Qualcomm has signed a joint venture in China with the local Guizhou government. The San Diego-based chipmaker will take a 45% stake in the new company, which will develop advanced server chips for the Chinese market. The move is an attempt at breaking rival Intel's dominance of chip sales for server computers. Intel, the biggest overall semiconductor maker, enjoys more than 99% market share for powerful processors that run data center machines and is able to charge more than $7,000 for some models – more than 7 times the price of even its most expensive desktop offering. Qualcomm will license its proprietary server chip IP and provide R&D processes to the venture. This allows the company to cater to Chinese customers and maintain direct relationships with regulators, and China to acquire more Western semiconductor technology and develop a high-tech plant in one of its poorer provinces. China is grooming the area to be a major cloud computing hub (companies like Alibaba and Uber have set up operations there). Overall, the deal is a win-win. Looks like Qualcomm is back in the government's good books.
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