Tsinghua Holdings Co. Ltd. has recently announced its plan to invest at least 30 billion yuan in mobile chip technology development, exemplifying its plan to battle with Qualcomm Inc.'s dominance over the local chip market.
In an interview with China Daily on Tuesday, chariman Xu Jinghong remarked that in order "to catch up with Qualcomm as soon as possible, [they] will pour 30 billion yuan, and probably even more, into the research and development of mobile chips in the next few years.
Tsinghua Holdings, a technology conglomerate backed by the prestigious Tsinghua University, also revealed that a portion of the investment will come from government funding and its partners.
Earlier in February, the group received 10 billion yuan from governments as an investment in chip companies.
Xu also cited the importance of advancing their technology, straightforwardly admitting that "compared with global competitors, [they] are still three to five years behind in technology, especially in cutting-edge 4G and 5G products."
"But if we don't close the technological gap, we will never win," he added.
The chairman also remarked that chips will be one of the focuses of Tsinghua as they continue to "expand [their] presence in the integrated circuit industry through both acquisition and self-research."
For Gartner Inc. analyst Roger Sheng, Tsinghua's biggest advantage is the government's emphasis on the semiconductor sector.
"Few tech companies in China have such a large amount of capital at their disposal as Tsinghua Holdings does. Despite its current technological weakness, it has ambitions and is acting very quickly," Sheng explained.
"Qualcomm's pioneering efforts in the sector also established a successful business pattern which Tsinghua can follow," he further noted.
Tsinghua Holdings' increasing efforts to develop and heighten its chip-related investments come with the government's call for the reduction of China's dependence on foreign technology, citing that such reliance may hurt national security.
The group became the largest chip firm in the country upon acquiring the world's third and fourth largest mobile phone chipmaker, Spreadtrum Communications Inc. and RDA Microelectronics Inc., in 2013.
"If we can manage to catch up with Qualcomm technologically, our innovation capability, the huge smartphone market in China as well as the labor cost, which starts rising but is still lower than that of the U.S., can offer us considerable commercial opportunities," Xu said.