Qual­comm says it’s here to stay in China

US chip gi­ant says Guizhou joint ven­ture will be mas­sive growth en­gine

China Daily (Canada) - - LIFE - By MASI and YANG JUN in Guiyang masi@chi­nadaily.com.cn

Derek Aberle, pres­i­dent of Qual­comm Inc, said on Wed­nes­day the mo­bile chip gi­ant is ded­i­cated to longterm in­vest­ments in China to ex­pand its server chip busi­ness, as the coun­try’s In­ter­net Plus ini­tia­tive is fu­el­ing an ex­plo­sive growth of in­ter­net data cen­ters.

Aberle’s com­ments came as the US com­pany un­veiled a new in­vest­ment arm, Qual­comm (China) Hold­ing Co Ltd, in Guiyang, cap­i­tal of Guizhou prov­ince, to bet­ter tap into op­por­tu­ni­ties in ar­eas such as the in­ter­net of things.

Ear­lier this year, Qual­comm formed a 1.85-bil­lionyuan ($280 mil­lion) joint ven­ture with the Guizhou pro­vin­cial gov­ern­ment, as part of its ef­forts to build up pres­ence in the server chip sec­tor, which is­now­dom­i­nated by In­tel Corp.

“The server chip busi­ness is very in­vest­ment-in­ten­sive. In the next five years, we have to in­vest a lot of money be­fore we see our re­turn,” Aberle said in an ex­clu­sive in­ter­view with China Daily on the side­lines of the on­go­ingChina Big Data In­dus­try Sum­mit in Guiyang.

But five years later, the joint ven­ture, Guizhou Huax­in­tong Semi­con­duc­tor Tech­nol­ogy Co, will be “one of our big­gest growth en­gines (in China)”, he added.

“We want to en­able the joint ven­ture to build up its own ca­pa­bil­ity and be able to take our tech­nol­ogy and de­velop its own sys­tems on chips for the China mar­ket,” Aberle said.

Qual­comm is now work­ing hard to seek fu­ture growth points as its ma­jor rev­enue source— chips used in smart­phones and tablets— is be­ing af­fected by the slower growth rate of the global smart­phone mar­ket.

But as China in­ten­si­fies its ef­forts to up­grade its tra­di­tional in­dus­tries with in­for­ma­tion tech­nolo­gies, a large num­ber of in­ter­net data cen­ters have mush­roomed, trig­ger­ing a huge de­mand for server chips.

Ac­cord­ing to re­search firm In­ter­na­tional Data Corp, China con­sumed about 3.7 mil­lion units of server chips in 2015, and the fig­ure is ex­pected hit 8.6 mil­lion units by 2020.

Roger Sheng, a se­nior an­a­lyst at re­search firm Gart­ner Inc, said it re­mains to be seen how Guizhou Huax­in­tong can help Qual­comm break into the Chi­nese server chip mar­ket, where the mo­bile chip heavy­weight has lim­ited ex­pe­ri­ence.

Qual­comm is build­ing server chips based on the ARM ar­chi­tec­ture, a chip de­sign that is widely used in smart­phones and tablets.

“It is still un­clear whether ARM can of­fer com­put­ing power strong enough to sup­port data cen­ters,” Sheng said.

But ac­cord­ing to Aberle, the com­pany’s scale and power with the mo­bile chip busi­ness can give it an edge in the server chip mar­ket.

Qual­comm also sees big po­ten­tial for the in­ter­net of things, which the com­pany said a lot of tech­nolo­gies it has al­ready de­vel­oped in mo­bile chips can be ap­pli­ca­ble to.

“The white goods mar­ket, for in­stance, turns out to be a big op­por­tu­nity,” Aberle said, adding that once home ap­pli­ances are con­nected to the in­ter­net, they can do more in­tel­li­gent things, which will de­mand much more com­put­ing power.

The com­pany is work­ing with Chi­nese com­pa­nies such as Haier Group and Midea Group Co to make home ap­pli­ances bet­ter com­pat­i­ble with each other across the smart home ecosys­tem.

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REUTERS

Vis­i­tors walk past the Qual­comm Inc stand at the Mo­bile World Congress held in Barcelona.

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