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Qualcomm agrees to $280 million joint venture deal with China

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January 18, 2016

It's reported this morning that Qualcomm has signed a $280 million joint venture agreement with China that will see the two entities design server chips in China's Guizhou Province.

The proposed deal was in discussions since October 2015. Qualcomm took the wraps off an ARM-powered server CPU last October.

Late yesterday, it advanced its plans by revealing a strategic cooperation agreement and joint venture deal with Guizhou Province.

The joint venture is called the “Guizhou Huaxintong Semi-Conductor Technology Ltd” and will focus on the design, development and sale of advanced server chipset technology in China, Qualcomm said.

The announcement notes that China is “the second largest country in the world for server technology sales, according to industry analysts.”

Qualcomm is also setting up an investment company in Guizhou that will serve as a vehicle for future investments in the Asian country.

The way to get ahead in China these days is by showing that you're not just in the Middle Kingdom to cash in on its growth.

Instead, handing over a thick layer of cash and using it to fund something that nourishes China's economy is the way to win friends and influence people in high places in the Republic.

Qualcomm's anti-trust worries in China were only resolved in February 2015. This new deal may therefore help China to forget some mistakes made in the past.

It may also be worth revisiting the snippet we quoted above about China being the world's second-largest server market, if only because the nation has previously signalled its liking for verifiably NSA-free technology.

Designed in China server chip sets might satisfy the country while also giving Qualcomm a sniff of a volume market for its ARM for servers CPUs.

In August of last year, we asked if China and Russia could realistically build their own stacks and still keep pace with users elsewhere in the world, with the people we consulted suggesting that such a move would delay the two nations' abilities to get something done.

It will be interesting to see how this new joint venture pans out in 2016 and to watch the reaction on how the rest of the industry copes with the new joint venture's side effects.

Source: Qualcomm.

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