Intel Partners With Chinese Firms on Server Chips

The vendor will work with Tsinghua University and tech firm Montage to create data center offerings that address Chinese security concerns.

Intel chip

Intel is partnering with two Chinese entities to build data center offerings based on the chip maker's Xeon server processors that will be used in infrastructures in the country.

The chip vendor is working with Tsinghua University and Chinese tech company Montage Technology Global Holdings to develop what Raj Hazra, vice president of Intel's Data Center Group and general manager of enterprise and high-performance computing (HPC) platforms at the company, called "locally developed, indigenous solutions to meet specific requirements for data center infrastructure in China."

The partnership, announced Jan. 21, is Intel's latest effort in the valuable China market, where company officials said the chip maker has invested more than $7.5 billion in the past 30 years. It also echoes moves by other U.S. and Western tech vendors to partner with companies in a country that is increasingly suspicious of foreign data center technologies.

"The rise of the digital services economy, often described as the 'Internet Plus' era in China, has resulted in tremendous growth of data centers and a diversification and proliferation of workloads," Hazra wrote in a blog post for the chip maker. "Intel serves this growing data center market in a variety of ways with the industry-leading Intel Xeon processors and other silicon components. This includes collaborating with companies that combine our standard Intel processors with their own innovations to build unique solutions that address specific workloads and technology requirements."

In this case, Tsinghua University and Intel will collaborate to develop a reconfigurable computing processor (RCP) module and accompanying system software that will work with standard Xeon server chips from Intel. The RCP will work alongside the Xeon processor in a module, and the RCP and software from Tsinghua, combined with the Xeon processors, will offer "capabilities that address specific local requirements," Hazra wrote.

Montage, which is owned by the state, will commercialize the products and begin bringing them to the Chinese market next year.

"We believe this new collaboration is a win-win as it enables TU and Montage to innovate alongside standard Intel Xeon processors to create new and compelling indigenous products while preserving the respective intellectual property ownership of all parties," he wrote.

Intel officials were not specific about what sort of regional requirements the new products would address, although a lot of the speculation centers on security. Chinese government officials over the past several years have voiced concerns that tech products like servers, processors and networking gear from the United States could pose security risks to the Chinese government and businesses, allowing for cyber-espionage. (U.S. lawmakers have voiced similar concerns about technologies from Chinese tech vendors, such as Huawei Technologies and ZTE.)

Chinese officials have been pushing the country's tech vendors to develop locally made products that could replace those from U.S. and other Western vendors.

However, the Chinese market continues to be important for vendors throughout the world, and some tech companies have struck joint venture agreements and similar deals with Chinese companies to reduce the country's concerns while enabling the companies to keep and grow their presence in the region. For example, Hewlett-Packard (now Hewlett Packard Enterprise) in May 2015 sold a controlling stake in its enterprise infrastructure business in China to Tsinghua Holdings—which is owned by Tsinghua University—and the two created a new entity called H3C.

The new company comprises HP's old H3C Technologies as well as HP's China-based server, storage and technology services business. Tsinghua Holdings owns a 51 percent stake in the new company, which will rank among the country's leaders in such segments as networking, servers, storage and technology services.

In addition, Intel's announcement comes days after Qualcomm officials said the mobile chip maker is creating a joint venture with China's Guizhou Province that will design and build Qualcomm ARM-based server SoCs. Guizhou will own 55 percent of the new venture, while Qualcomm will own the other 45 percent.

Intel in 2014 announced a $1.5 billion investment to gain a 20 percent stake in the state-owned Tsinghua Unigroup—which runs Chinese chip designers RDA Microelectronics and Spreadtrum Communications—as well as a partnership with Chinese chip maker Rockchip. Both moves were designed to accelerate Intel's mobile chip ambitions. Intel and other U.S. tech vendors also continue to invest in Chinese companies.

The recent efforts in China come amid growing issues with China's slowing economy, which officials from both Intel and Advanced Micro Devices said recently has hurt their financial numbers and would continue to be a concern going into 2016.