Tsinghua to develop chips with UK company

Beijing - Tsinghua Unigroup Ltd is teaming up with Britain's Dialog Semiconductor Plc to develop smartphone chips, in a deal that will help the 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, in 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 market.

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 become connected. Unigroup is simultaneously devising an ambitious expansion in memory chips.

It has begun building a $30 billion memory-chip production complex in China that will become the country's largest when completed.

Spreadtrum RDA plans to launch its first chip for fifth-generation wireless networks in 2018.

Spreadtrum RDA Chairman Leo Li said: "We started as a low-end maker, and now after years of R&D investment, we're looking forward to gaining a bigger presence in the high-end sector. That is why we have joined hands with Dialog."

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, the company said on Thursday. The company is now valued at about $8.5 billion, according to its website.

Asked about reports about a potential IPO down the line, Spreadtrum RDA's Li said the chip designer may need to raise capital in the future to buy companies and patents. He declined to elaborate.

Li said: "It's a Three Kingdoms situation in the global smartphone chip-making industry. Qualcomm, MediaTek and Spreadtrum RDA are the only three major players."

Bloomberg