Huaxintong to start shipping China-customized server chips in 2018

Guizhou Huaxintong Semiconductor Technology Co, a joint venture between Qualcomm Inc and the Guizhou provincial government, plans to start shipping China-customized server chips in 2018, a senior company executive said.

Earlier this year, Qualcomm and the Guizhou government poured another 1 billion yuan ($144 million) into the company, bringing the total investment to 2.85 billion yuan.

"We are scrambling to absorb all the licensed technologies from Qualcomm. We are also working on a customized encryption algorithm which will live up to China's security standards," said Wang Kai, CEO of Huaxintong.

Huaxintong has a R&D center in Beijing which focuses on chip design, a facility in Shanghai for chip production, and a complex in Guiyang for chip packaging.

Qualcomm owns a 45 percent stake in Huaxintong, with the Guizhou provincial government accounting for the remainder. It is part of a broad effort by Qualcomm, which dominates the smartphone chip sector, to compete with Intel Corp in server chips.

Qualcomm President Derek Aberle said in an earlier interview, that Huaxintong would be one of its biggest growth engines in five years, as China's Internet Plus strategy fuels an explosive growth of internet data centers.

The joint venture is also an example of how international companies are adjusting their strategies in China, where State-owned enterprises are embracing homegrown IT products amid increasing concerns over cybersecurity.