Qualcomm to Make Server Chips in China

The company partners with the Guizhou Province to create a joint venture that will design, develop and sell ARM-based data center SoCs.

Qualcomm chips

Chip maker Qualcomm, which is looking to expand its business beyond mobile devices, will be building ARM-based server processors in China.

Qualcomm, the world's top mobile chip provider, is creating a joint venture with a Chinese province to design and build systems-on-a-chip (SoCs) that company officials hope will challenge Intel's dominance in the data center and carve out some market share.

The partnership with the country's Guizhou Province is also the latest move by Qualcomm to firmly establish itself in an increasingly important China market that other tech vendors—including competitors like Intel and IBM's OpenPower effort—also are targeting.

"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," Anand Chandrasekher, senior vice president and general manager of Qualcomm's Datacenter Group, said in a statement.

The joint venture—called the Guizhou Huaxintong Semi-Conductor Technology Co.—will have an initial investment of about $280 million and will be 55 percent owned by the investment arm of the Guizhou provincial government and 45 percent owned by a subsidiary of Qualcomm. The new business will design, develop and sell server chipsets in China, which Qualcomm officials said is the second-largest country in the world for server products.

Along with the joint venture, the chip maker said it also will create a company in Guizhou through future investments in China.

"The actions announced today are important steps for Qualcomm as we deepen our level of cooperation with, and investment in, China," Qualcomm President Derek Aberle said in a statement. "We have worked actively with our partners in China for more than 20 years; however, the strategic cooperation with Guizhou represents a significant increase in our collaboration in China."

The chip maker has had a complicated relationship with China over the past couple of years. Qualcomm a year ago agreed to pay a $975 million fine and change its business practices in China to settle an antitrust investigation by the country's National Development and Reform Commission (NDRC) that spanned more than 14 months. The company also has been working with Chinese device OEMs in the country to reach licensing agreements in line with the NDRC settlement.

Other recent moves in China include in 2014 investing $40 million in Chinese companies and creating a $150 million fund for the Chinese market, and last year partnering with Huawei Technologies, Chinese foundry Semiconductor Manufacturing International Corp. and others to create the SMIC Advanced Technology Research and Development Corp., a joint venture that will push R&D toward next-generation chips for both the Chinese market and abroad.

Qualcomm officials in October 2014 announced the company was planning to build server chips, joining other vendors—including Applied Micro, Cavium, Broadcom, Marvell Technologies and Advanced Micro Devices—in using ARM's low-power architecture for data center systems, from servers to network devices to storage appliances. ARM and its chip-making partners want to offer alternatives to Intel's x86 chips in the data center, meeting a demand among some enterprises for a second source of processors to help drive innovation, drive prices down and offer other options should Intel hit supply problems.

Qualcomm in October 2015 announced it was sampling its server SoCs with some top-tier data centers and demonstrated its Server Development Platform (SDP) using a pre-production version of a 24-core SoC that was built using the 64-bit ARMv8-A instruction set. Qualcomm officials reportedly are expecting its first server chips to be in production later this year.