Qualcomm said to end chip partnership with local government in China’s rural Guizhou province

Li Tao
Qualcomm said to end chip partnership with local government in China’s rural Guizhou province

Huaxintong Semiconductor Technologies (HXT), a joint venture established in 2016 by US chip maker Qualcomm and China’s Guizhou government that specialises in making server chips, will be wound down by the end of April, according to a media report.

HXT executives said during internal meetings on Thursday that the company would shut down by April 30, The Information reported on Friday, citing 10 unnamed employees from with the venture, without elaborating on the reasons behind the decision.

Qualcomm declined to comment on the report. A media query sent to HXT’s official WeChat account did not receive an immediate reply. HXT’s official website does not list any contact information and local directory inquiries said a phone number for HXT is not registered.

China is on a drive to build leadership and more self-sufficiency in strategic technology areas as part of its wider “Made in China 2025” (MIC2025) policy plan. At the heart of the plan is the country’s semiconductor industry, in part because advances in chip technology can lead to breakthroughs in other areas of technology, handing the advantage to whoever has the best chips – an edge that currently is out of Beijing’s reach.

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On Tuesday, Qualcomm announced it had settled its wide-ranging legal dispute with Apple by signing a six-year patent licensing deal and a supply agreement that could pave the way for getting its modem chips back into the iPhone. On the same day, Intel, which provided chips for Apple last year, announced that it would exit the 5G smartphone business and complete an assessment of the opportunities for existing 4G and 5G modems in PCs.

During the Qualcomm AI Open Day in Shenzhen on Friday, the US company announced its three latest AI chips, and demonstrated the latest use cases for its 5G and artificial intelligence-based technologies.

Server chip maker HXT, registered in Guizhou province’s Gui’An New Area with operations and an R&D centre in Beijing, Shanghai and Guiyang – Guizhou’s provincial city, is 55 per cent owned by the local Guizhou province and 45 per cent by Qualcomm, according to HXT’s website.

The venture focuses on designing, developing, and selling sophisticated server chips, while Qualcomm provides the venture with advanced technology know-how.

On November 27, 2018, HXT announced in Beijing that its Arm-based server chip – the StarDragon 4800, had officially started mass production. HXT was still trying to hire a market development manager, according to a hiring post on its website dated November 21, 2018.

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In December when Qualcomm confirmed 269 US lay-offs in the US in the latest of a number of cost-cutting moves, the US company said it planned to “continue supporting the HXT server joint venture in China”, according to a statement.

Guizhou, one of China’s poorest provinces, is morphing into a world-class hi-tech hub by working with world-class technology giants including China’s Baidu, Alibaba, and Tencent, and hosts an annual China International Big Data Industry Expo in Guiyang that has been drawn global attention.

During the big data expo in 2015, Qualcomm expressed its intention to aid local data industry development in Guizhou province, according to a China News Network report posted on HXT’s official website.

In May 2018, Apple’s Greater China managing director Isabel Ge Mahe reiterated that protecting user privacy was key to the company after the maker of the iPhone started building its first China data centre in the province, during the China International Big Data Industry Expo 2018 held in Guiyang.

Apple’s new data centre, jointly built by the US technology company and Guizhou-Cloud Big Data (GCBD), is expected to cover about 67 hectares in Gui’an New Area and offer iCloud services on the mainland from 2020, according to media reports.

The joint venture would comply with Chinese government policy, which requires foreign operators to partner with domestic data centres so that data on Chinese citizens is stored within the country and not on overseas servers.

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