Chipmaker Qualcomm has confirmed that the company has entered into collaboration with Chinese company Semiconductor Manufacturing International Corp (SMIC) for the 28 nanometer (28nm) chip production in China.
The Qualcomm 28nm chips are used extensively in a wide range of current smartphones. The smartphone industry has been increasing at a rapid pace and the demand for 28nm chips will also surge with the increased demand of smartphones.
On Thursday, July 3, both the companies officially announced that they are working together to manufacture Qualcomm Snapdragon processors in China.
"SMIC is an important supplier to Qualcomm Technologies, and we are pleased to be working with SMIC, whose capabilities and technology offerings are growing to meet our demanding product needs," says Murthy Renduchintala, executive vice president, Qualcomm Technologies, Inc. "We look forward to working with SMIC on bringing up its 28nm production in China and executing on our regional supply chain strategy. With SMIC becoming a more important supplier in our global operations, this collaboration will help further our manufacturing footprint and services in China, one of the world's largest mobile consumer opportunities."
SMIC has previously assisted Qualcomm Technologies with connectivity linked products, power management and wireless solution. The latest collaboration with the 28nm chip is expected to strengthen strategic relations between both the companies. SMIC will work with Qualcomm to design products required in the massive mobile communications market.
Some market observers believe that Qualcomm's biggest chip supplier is Taiwan Semiconductor Manufacturing Co Ltd (TSMC). However, in 2012, TSMC lagged behind in supplying chips to many customers including Qualcomm, which affected Qualcomm's supply chain. The incident may have made Qualcomm to look out for alternative suppliers.
The latest collaboration will help SMIC in its 28nm process maturity. Qualcomm may also advantage from the deal to strengthen its relation with the Chinese government.
In late 2013, China's National Development and Reform Commission (NDRC) raided Qualcomm's offices in Shanghai and Beijing and the company is under scrutiny. Qualcomm is the world's biggest chipmaker and Chinese regulators have accused the company of overcharging and taking advantage of its market position. Qualcomm may face penalties of up to $1 billion in China.
SMIC is currently the fifth largest contract chipmaker in the world. The latest collaboration with Qualcomm is expected to give a boost to the Chinese semiconductor business and SMIC may offer its services to other customers as well.
