Qualcomm has built a business in China by harvesting patent royalties from smartphone makers using its wireless chips. But the California-based company has also faced challenges there from Chinese authorities, which have stymied the chipmaker’s growth with antitrust investigations.
Such incidents have taken place in the background of China’s growing chip industry, which is trying to escape the shadow of foreign competitors. Now Qualcomm is lending support to the embryonic industry, saying on Monday that it will open a semiconductor test facility in Shanghai.
The chipmaker said that the new facility, called Qualcomm Communication Technologies, will start operating in October. Amkor Technology, an Arizona-based semiconductor company, will handle the chip packaging and testing at the facility.
The facility’s opening marks Qualcomm’s latest attempt to plant roots within China’s borders. But it is also a new undertaking for Qualcomm, which follows a fabless business model, paying factories to turn its designs into chips.
Qualcomm sells modem chips for connecting things like smartphones and other devices with cellular networks. The majority of its profits stems from licensing out patents for its wireless chips and mobile processors to smartphone makers and other companies. And it collects percentage of every product sold using those chips.
Licensing patents has turned into big business for Qualcomm, but the new facility is trying to provide services to China’s native chip industry. China is spending billions of dollars to expand the country’s chip industry, which has paled in comparison to foreign competition for years. China depends heavily on foreign chips for things like televisions, cars, and mobile phones.
Qualcomm said that the new facility underlines its commitment “to invest and help develop semiconductor expertise in China, and is indicative of growth in semiconductor leadership in the country.”
In the past, Qualcomm has had a rocky relationship with Chinese authorities, which have tightened regulations on American chipmakers in recent years. In February 2015, officials fined Qualcomm $975 million and forced it to modify its licensing practices after a lengthy antitrust investigation. Qualcomm has also quarreled with individual Chinese companies like smartphone maker Meizu, which it sued for infringing on chip patents.
These issues have not deterred Qualcomm from trying to strengthen ties with China in other fields. The company partnered last year with China’s Semiconductor Manufacturing International Corp., also known as SMIC, to develop a tiny smartphone processor that only a few companies are selling. Qualcomm has also established a venture with the government of China’s Guizhou province to create new server chips.
Immediately after the antitrust investigation, Chinese companies were slow to sign new licensing deals with Qualcomm. But since then, the company has rebounded. It says that it has signed deals with more than 100 Chinese customers, including large electronics companies like Hisense and smartphone makers like Oppo Mobile Telecommunications.
