Recruiting in China

U.S. company teams up with Chinese vendors; analysts say move will boost market position

Qualcomm Inc is setting up a high-end semiconductor research facility with China's top chip makers. This is the United States-based company's biggest move in China after regulators imposed a record $975 million fine on Qualcomm for anti-competitive practices earlier this year.

Semiconductor Manufacturing International Corp, one of the largest chip foundries in the country, will be in charge of the daily operations of the new research center, which will be located in Shanghai, multiple sources told China Daily on Thursday.

Huawei Technologies Co Ltd and Imec, a Belgium-based nano-electronics research center, will also join the collaboration.

The agreement will be announced in the coming days during Belgian King Philippe's visit to China.

"It will be a ground-breaking partnership for Qualcomm, especially as it has not formed such an alliance till now," said a person familiar with the matter. At least three sources, working for the companies involved and for a third-party organization, confirmed the alliance. Qualcomm and SMIC declined to comment. Huawei and Imec were not reachable on Thursday.

It is unclear how Qualcomm will contribute to the partnership, but local vendors are eager to acquire chip design and manufacturing technologies from the world's largest mobile chipmaker. SMIC and Qualcomm are working together on chips made with the 28 nanometer process technology. The Chinese company is eyeing more techniques with higher precision.

Nicole Peng, research director at Canalys China, said any sort of technology transfer will be welcomed by the government as the company continues to remedy its relationship with authorities.

In February, the National Development and Reform Commission fined Qualcomm nearly $1 billion for violating China's antitrust law. But the investigator did not upset its patent licensing model, leaving the California-based company still hugely profitable in the country. China, the world's hub of electronics, accounted for half of its $26 billion in revenue last year.

"This is a good initiative for Qualcomm especially when it wants to consolidate and strengthen its market position in China," Peng said. "Investing in a R&D center can also allow Qualcomm to leverage its local talent pool."

Cisco Systems Inc said on Wednesday it is investing more than $10 billion in China over the next few years, despite a security-concern-led sales slump in the country.

Personal computer vendor Hewlett-Packard Co also sold the majority of its stake in a communications equipment subsidiary last month to a local partner to win more government procurement orders.

China is moving to locally made information technology products over fears that products provided by foreign companies may have security issues. The change in attitude made an array of overseas providers apprehensive that they were being driven out of the world's most vibrant technology market.

Pledging jaw-dropping investments and patent transfer is becoming a common practice for foreign tech companies to show they value the Chinese market and are eager to be part of government-backed IT projects.