Qualcomm trying to help Chinese phone makers expand abroad, by setting up a local unit

Qualcomm has launched a unit in China to help local smartphone makers expand operations in overseas markets. This is part of Qualcomm’s efforts to build strong relationship with China, specially since more than half of Qualcomm’s revenue comes from Chinese customers.

According to a report in The Wall Street Journal,  this is a move by Qualcomm to ensure that Beijing is on its side in an atmosphere where China is reducing its reliance on foreign (specially US) technologies. China is wary of using US technologies specially after Edward Snowden alleged that US IT gear is used by Washington to spy on other countries. Apart from this, Chinese authorities are also investing a lot of money into local chip makers to reduce reliance on US companies such as Qualcomm and Intel.

Qualcomm makes a lot of its profits by licensing out its wireless patents. A lot of Chinese phone makers had complained about Qualcomm pricing its technology unfairly, which led to a 15-month long investigation of the US company.

Qualcomm did not agree with the Chinese government findings that it broke anti-monopoly laws. In February though, Qualcomm paid a $975 million settlement of antitrust fine and reduced royalty rates on phones sold in China.

“One of the things we are doing that is new is a significant refocusing of our efforts on supporting our Chinese customers to export out of China,” said Jeff Lorbeck, senior vice president of Qualcomm China to WSJ.

Qualcomm is trying to attract Chinese phone makers who want to expand globally such as Xiaomi Corp., Huawei Technologies Co., among others. It had set up a globalisation office in Shenzhen last quarter to aid with the process of connecting Chinese phone makers with markets abroad. Qualcomm has also made announcements of partnering with semiconductor foundries in China and allocation of $150 million for Chinese startups.

Considering the fact that China’s top smartphone maker Xiaomi has invested heavily in Chinese chipmaker Leadcore technologies  and Huawei already has its own system on chip with the HiSilicon Kirin line of processors, it is natural for chipmakers such as Qualcomm and Intel to feel some heat. In fact, apart from Qualcomm, Intel has also invested in factories in Shenzhen so that more Chinese tablets / 2-in-1s have Intel chips.