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Intel’s Relationship with China Goes Deeper Than Memory

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How is China involved in Intel’s 5G growth?

Earlier in this series, we discussed rumors about Intel (INTC) looking to catch up with memory giants by collaborating with China’s (MCHI) Tsinghua Unigroup. These rumors were fueled by Intel ending its collaboration with Micron (MU) and making its memory chips available to third-party customers. However, there are many threads that link Intel to Tsinghua Unigroup.

Intel owns a 20% stake in Chinese wireless chipmakers Spreadtrum Communications and RDA Microelectronics, both owned by Tsinghua Unigroup. Intel has already signed a long-term supply agreement for 5G modems with these companies. Speadtrum plans to use Intel’s XMM 8000 5G modems in its high-end smartphone processors and supply Intel’s 64-bit x86 Airmont processors alongside ARM-based smartphone processors.

If the rumor of its memory collaboration with Tsinghua Unigroup comes true, Intel’s content per Android phone would increase. This higher content could help Intel tap China’s wireless chipset market, which is currently dominated by Qualcomm (QCOM).

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China’s AI potential

Intel is also eyeing China’s AI (artificial intelligence) market, which is growing aggressively. China Daily, citing data from CB Insights, reported that China has surpassed the United States in AI (artificial intelligence) startup funding. China’s AI startups received 48% of the world’s AI funding in 2017—up from just 11.3% in 2016—while US startups accounted for 38%.

Although the United States still has the most AI startups and equity funding, China is slowly bridging this gap. Within AI, China is focusing largely on facial recognition and AI chip technology. As the country aims to become a leader in AI by 2030, it is promoting digital economy.

Digital economy generates large datasets used to develop intelligent and actionable insights. Unlike the United States, which restricts the use of these datasets, China is flexible on their use for AI applications.

Intel eyes China’s AI market

In an interview with Chinese newspaper Xinhua, Intel Programmable Solutions Group’s vice president of Strategy Innovation and Planning Vincent Hu stated that the company could support China’s AI efforts. He stated that Intel’s FPGA (field-programmable gate array) solutions could give AI developers the flexibility to program and modify solutions.

Intel has successfully completed the first year of its three-year transformation into a data-centric company. It is on track to continue its transformation in 2018 by focusing on 5G and AI.

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