[photopress:mobilephone.jpg,full,alignright]Qualcomm in the US has signed an agreement with China’s top semiconductor manufacturer Semiconductor Manufacturing International Corp (SMIC). For the China semiconductor market this is fairly major news.
SMIC will make Qualcomm’s chips at its plant in Tianjin, which the Chinese firm acquired from Motorola in 2003. SMIC has wafer fabrication capabilities while Qualcomm leads in 3G mobile technology which is the direction in which the world of mobile phones is heading. Qualcomm is the world’s leading mobile phone solutions provider but does not make chips. SMIC will be the first Chinese mainland firm to make chips for Qualcomm.
So why is the deal so important?
This is cutting edge stuff and in the world of mobile communication semi-conductors Qualcomm leads the field by a very, very large margin. Qualcomm provides the largest portion of chips used in the 3G mobile phones sold globally.
The figures are amazing. The firm sold about 151 million chips for 3G phones in the financial year of 2005. Statistics showed that about 210 million 3G phones were sold globally last year. Qualcomm plainly totally dominates this market.
In research Qualcomm is also quite remarkable. The company has spent US$3.1 billion in semiconductor research and development (R&D) in the past four years. About 15 per cent of its total sales is used in R&D which is an extremely high percentage for any industry.
Thus SMIC will be working at the very forefront of the industry in both quantity and quality. SMIC posted a net profit of US$2.2 million for the second quarter of this year after a string of quarterly losses.
Source: China.org
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