Qualcomm Inc. recently inked a deal that will boost the technology of China's biggest semiconductor foundry, Semiconductor Manufacturing Internal Corp. (SMIC).
Apart from Qualcomm, the joint venture will also involve Huawei Technologies Co. and Belgium's chip research center, Imec. The endeavor seeks to develop advanced 14-nanometer chips.
As part of the deal, SMIC, which has seen a 6-percent rise in its shares, is also expected to decrease research costs and subsequently narrow the gap between the semiconductor manufacturer and its rivals such as Intel Corporation and Taiwan Semiconductor Manufacturing Co. Ltd.
The joint venture company is predicted to lead the production of such chips by 2020. However, its rivals are expected to produce 10-nanometer chips by that time.
Recently, Beijing has been investing billions as part of its effort to boost its semiconductor sector. The move seeks to decrease the Chinese capital's dependence on U.S. technology because of economic and security reasons.
Meanwhile, U.S. suppliers have been seeking to secure their share in the Chinese major market, fostering partnerships with domestic firms.
In 2014, SMIC and Qualcomm have teamed up to develop 28-nanometer chips. Technologically speaking, chips with smaller number are more advanced.
As well, China's antitrust authorities have investigated Qualcomm last year because of unfair market competition practices. The San Diego-based firm agreed earlier this year to settle for a fine worth $975 million. It also reduced the royalty rates of handsets being sold in the country.
Helping hugely in easing skepticism over foreign companies, overseas firms have inked strategic deals with Chinese enterprises.
In May, Tsinghua Unigroup Ltd. stated that it would purchase a 51-percent stake in H3C, Hewlett-Packard Co.'s networking gear in the country.