Qualcomm builds server chip joint venture in China

United States chipmaker Qualcomm Inc said on Sunday it is building a 1.85 billion yuan ($280 million) joint venture in Southwest China's Guizhou province to develop server chips for the Chinese market.

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

Huaxintong will be based in Guian New Area, a technology zone close to the provincial capital of Guiyang. As part of the deal, Qualcomm will also license its proprietary server chip technology and provide research and development processes to the joint venture, said a statement released by the US company.

Derek Aberle, president of Qualcomm, said Huaxintong will focus on the design, development and sales of "advanced server chipset technology" in the country, the second largest market for server technologies in the world.

Worldwide revenue for the server technology sector is expected to reach $15 billion by 2020, and $6 billion will come from China, according to Aberle.

Qin Rupei, executive vice governor of Guizhou, said the collaboration with Qualcomm will help the region build its high-tech industry, a key strategy for the one of the most under-developed provinces to leapfrog in economic growth.

China spent more than $200 billion on importing chipsets in 2014. The amount was higher than the country's spending on oil imports that year, according to the Ministry of Industry and Information Technology. The central government has made semi-conductor design and manufacturing a strategically-critical sector during the 13th Five-Year Plan (2016-20).