Apple-supplier Dialog to develop chips with China’s Tsinghua

Bloomberg

Tsinghua Unigroup Ltd. is teaming with Britain’s Dialog Semiconductor Plc. to develop smartphone chips, a deal that will help the government-linked Chinese technology giant expand its growing semiconductor empire.
Unigroup mobile-design subsidiary Spreadtrum & RDA and the British supplier of chips to Apple Inc.’s iPhones and iPads are considering a joint venture in eastern China, through which the pair will jointly design communications components. Dialog, which gets almost 70 percent of its revenue
from Apple according to data compiled by Bloomberg, will help Unigroup with crucial mobile power management technology in return for bigger access to the Chinese smartphone and Internet of Things markets.
The Chinese company is keen on a deeper foray into the Internet of Things, a market that will blossom in coming years as devices in the home increasingly get connected. Unigroup is simultaneously devising an ambitious expansion in memory chips: Championing China’s effort to wean itself off foreign technology, it’s begun building a $30 billion domestic memory-chip production complex that will become China’s largest when completed. Spreadtrum & RDA plans to launch its first chip for fifth-generation wireless networks in 2018.
“We started as a maker of low-end and now, after years of R&D investment, we’re looking forward to gaining a bigger presence in the high-end sector,” said Spreadtrum & RDA Chairman Leo Li. “And that’s why we joined hands with Dialog.”
Tsinghua, the investment and technology affiliate of the university attended by Chinese President Xi Jinping, is leading a $150 billion charge to develop a world-class semiconductor industry. But its broad ambitions have aroused concern among US officials about the country’s intention of dominating an industry crucial to computing and smartphones. Intel Corp., Micron Technology Inc. and Qualcomm Inc. are among the biggest US suppliers of chips to China.
Unigroup bought Spreadtrum Communications and RDA Microelectronics Inc. about three years ago and merged them to form a new mobile chip unit, which now competes with MediaTek Inc. on
the lower end while Qualcomm
Inc. dominates the higher end. Spreadtrum & RDA’s biggest customer today is Samsung Electronics Co., Li said.
Spreadtrum & RDA had revenue in 2016 of 12 billion yuan ($1.7 billion), up from 10.9 billion yuan a year earlier, it said on Thursday.
The company is now valued at about $8.5 billion, according to
its website. Asked about repo-
rts about a potential IPO down the line, Spreadtrum & RDA’s Li said
the chip designer may need to raise capital in future to buy comp-
anies and patents. He declined to elaborate.
“It’s a Three Kingdoms situation in the global smartphone chip-making industry. Qualcomm, MediaTek and Spreadtrum & RDA are the only three major players,” Li told reporters in Beijing after a signing ceremony on Thursday.
Tsinghua Holdings Co. was founded in 2003 by Tsinghua
University.
The group holds stakes in more than 10 listed units with investment spanning semiconductors, nuclear energy, financial services, education and publishing. It’s shown an acquisitive streak: apart from Spreadtrum and RDA, it withdrew from a $3.8 billion investment in Western Digital Corp. in the face of a US security review, and a potential $23 billion bid for Micron Technology Inc. never materialized.
The group’s main technology businesses include integrated circuits developer Unigroup Guoxin Co., formed via a series of mergers of state-backed entities. And its $2.8-billion Changjiang Storage was the result of a merger between Unigroup’s own memory chip operations and a government-run factory in 2016.
Dialog, a leader in mobile power management, seeks to capture a larger slice of components in smartphones. It’s established early gains in fast-charging technology, working with Asian device makers including Samsung and Huawei Technologies Co. Another growth area will be Bluetooth chips used
in devices such as fitness bands
and voice-activated remote controls, Chief Executive Officer Jalal Bagherli has said.