Qualcomm’s failed JV reveals poor chipset strategy amid rising competition: insiders

By Chen Qingqing Source:Global Times Published: 2019/4/22 19:48:40

Door of Huaxintong Semiconductor (HXT) is closed on Sunday in Beijing. Photo: IC

US-based technology giant Qualcomm will reportedly close its chipset joint venture (JV) in Southwest China's Guizhou Province later this month, reflecting its poor understanding of the nation's chip-making industry and growing competition from local players, industry insiders said.

Huaxintong Semiconductor (HXT), a JV between Qualcomm and the local government of Guizhou, will be closed by the end of this month, US-based technology site the Information reported over the weekend, citing unidentified HXT executives. 

The JV, founded in January 2017, was registered with initial capital of 1.85 billion yuan ($2.8 billion), with the Guizhou government holding a 55-percent stake and Qualcomm taking 45 percent, according to the official website of HXT. 

Several Chinese industry insiders said they were not surprised by the failure of Qualcomm in the project, which showed the US giant's poor understanding of the local market and failure to fully integrate into the Chinese chip-making supply chain. 

"We studied the project's feasibility before. Only focusing on making server chips based on ARM architecture was unlikely to work out," a veteran industry representative surnamed Liu told the Global Times on Monday. 

Intel's X86 architecture is still dominant in the server chip sector in China, although some companies like Huawei have adopted ARM architecture to diversify their major suppliers and reduce reliance on Intel. 

"Qualcomm launched this project in Guizhou to improve government relations, as it was fined a large amount of money in an antitrust case in 2015. The local Guizhou government aimed to build a big data and advanced technology center in the province," Liu said, noting that the US company also believed that the Chinese government would provide help for server procurement. 

However, the nation's chip industry has been developing in recent years with advanced semiconductor and data companies located in cities like Beijing and Shanghai, leaving Qualcomm poorly connected with the supply chain, according to industry insiders. 

"The US company rushed to launch this chipset project, but it eventually found that it was not easy to achieve mass production," a source close to the Ministry of Industry and Information Technology who participated in an earlier stage of the HXT project, told the Global Times on Monday. 

Qualcomm and HXT have not responded to interview requests sent by the Global Times as of press time on Monday. 

Newspaper headline: Qualcomm’s failed JV reveals poor chipset strategy


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