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Qualcomm announced today that it has signed a deal with the Chinese province of Guizhou to jointly develop advanced server chipsets in China.

Both parties have invested $280 million in the joint venture, which will be 55 percent owned by Guizhou and 45 percent owned by a subsidiary of Qualcomm.

Qualcomm, like rival Advanced Micro Devices, plans to make ARM-based processors for servers in data centers. In October, Qualcomm announced it had samples of its first pre-production ARM-based server processor and did a live demo of its server development platform. It is also collaborating with chip companies Xilinx and Mellanox.

Steve Mollenkopf, CEO of Qualcomm, met with Chinese officials, including Chen Min’er, secretary of the Guizhou Provincial Committee of the Communist Party of China (CPC) and Sun Zhigang, acting governor of Guizhou Provincial Government.

In addition, Qualcomm also will establish an investment company in Guizhou that will serve as a vehicle for future investments in China. The overarching agreement establishes a long-term commitment between the two parties to work closely together to identify and pursue business opportunities in the province. Qualcomm is licensing its server technology to the joint venture and will assist with research and development.

“This server technology joint venture is a win-win scenario for Qualcomm and our Guizhou partner and will yield mutual benefits for both sides as we together pursue a very large data center opportunity in China,” said Anand Chandrasekher, senior vice president and general manager, Qualcomm Data Center Group, in a statement.

The Chinese officials said they see the deal as a chance for Guizhou to develop its own chip industry.

“The central government has attached great importance to development of the integrated circuit (IC) industry by formulating the IC Industry Development Outlook and setting up the National IC Industry Investment Fund to boost the development of the IC industry,” said Qin Rupei, executive vice governor, Guizhou Provincial Government.

The joint venture is dubbed Guizhou Huaxintong Semi-Conductor Technology Co., and it will be registered in Guian New Area, Guizhou, with operations in Beijing.

This announcement comes on the heels of several other investments by Qualcomm in China, including Qualcomm’s cooperation with Semiconductor Manufacturing International Cooperation (SMIC) to manufacture smartphone chips, investment into the SMIC Advanced Technology Research and Development (Shanghai) Corp equity joint venture, and the creation of a $150 million China Investment Fund.

“It’s interesting Qualcomm did this with a provincial government versus national. Someone at the company must have an ‘in’ there,” said Patrick Moorhead, analyst at Moor Insights & Strategy, in an email. “The deal is smart because both entities are investing 100’s of millions meaning to me there’s a 100 percent chance the Guizhou government will use the chips. This doesn’t mean Intel is out, but that Qualcomm will get some if they can actually deliver. Qualcomm hasn’t shown any benchmarks yet so performance probably isn’t where they’d like it and no one ever gets server chips right on the first go-around.”


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