Intel Investing in the Chinese Smartphone Market

The smartphone industry is one of the biggest and fastest growing industries in the

world today. It started in the late 90’s but became popular in the late 2000’s when Apple introduced its iPhone. The iPhone revolutionized the industry by introducing its user-friendly features through its touchscreen interface and virtual keyboard, and its multiple applications. Competing with the iPhone are the Android phones. Android phones are generally cheaper than the iPhone and have applications and features that a lot of people use that the iPhone does not give. Overall, global consumers now have a lot to choose from in choosing their preferred smartphone. With the smartphone being a necessity for most people, the global revenue for smartphone sales has been increasing the past few years. In 2016, the global revenue for smartphones amounted to 428.9 billion dollars according to statistica.com. It is estimated that by 2018, a third of the world’s population would own a smartphone.

China has been a country that is addicted to smartphones. It is projected that by 2018, a quarter of smartphone users in the world would be from China. In 2016, the smartphone market size in China reached 133.6 billion U.S. dollars. Leading this industry are phone manufacturers like Apple, Huawei, Vivo, and Oppo.

The smartphone market in China gives a lot of opportunities for companies who want to take a cut of the revenue. One company that looks to do this is Intel Corporation. Intel is an American technology company that is well known around the world as a semiconductor chip manufacturer. In fact, Intel is the highest valued semiconductor manufacturer in terms of revenue. Specifically, Intel has been manufacturing numerous semiconductor products for personal computers.

In recent years, Intel has ventured into production of processor chips for smartphones. It has partnered with different phone companies like ASUS. However, the semiconductor manufacturing leader for smartphones is Intel’s rival Qualcomm. Intel has been famous in making semiconductor chips for personal computers but has struggled to do so in tablets and smartphones. In efforts to take a bigger piece of the market shares from Qualcomm, Intel has been investing in different tech companies and manufacturing plants in China.

One of the moves Intel has made is investing 5.5 billion U.S dollars on manufacturing semiconductors in China. This is in efforts of Intel to strengthen its ties with Beijing to improve the company’s revenue. Intel said that it would convert a facility in Dalian, China to produce memory chips. Additionally, new memory supplies from the chipmaker Intel would cut shares for other memory manufacturers like Samsung Electronics Co Ltd and SK Hynix Inc, and Toshiba Corp.

Another move that Intel made recently was investing 1.5 billion U.S. dollars in two Chinese chipmakers. The deal lets Intel acquire 20% stake in two semiconductor companies under Tsinghua Holdings Co Ltd. This deal would let Intel have a better grasp at the Chinese mobile chip market.

For both deals, Intel looks to improve its chances in the Chinese smartphone market. On the other side of the deal, China has been looking to grow its semiconductor industry. Having support from a United States semiconductor company would be beneficial for this plan of China.

The Chinese mobile market attracts numerous investors from around the world because of its market size. Multiple investors are joining in to take a share of China’s smartphone market. However, not all companies see it this way. Japanese investments in China has seen a decline in recent years. In fact, while foreign investments rose 6.4% in China, Japanese investments fell for 25.2%. This fall was due to multiple conflicts between the two countries like the dispute over the Senkaku islands, and the issue of Japanese CEO Toshio Motoya publishing books denying the Nanking massacre. In spite of this, China is still a leader in the smartphone market and multiple foreign investors still look to invest in China.

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