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Tsinghua Holdings uses government backing to challenge Qualcomm dominance

Tsinghua Holdings, a technology business backed by Tsinghua University, will use government funding to develop mobile chip technology and challenge Qualcomm's dominance in the Chinese market, China Daily said13 Aug 2015

Tsinghua Holdings will invest at least 30 billion yuan (US$4.76 billion) in developing the technology, chairman Xu Jinghong told China Daily.  

"To catch up with Qualcomm as soon as possible, we will pour 30 billion yuan, and probably even more, into the research and development of mobile chips in the next few years," Xu told the newspaper.

"Frankly, compared with global competitors, we are still three-to-five years behind in technology, especially in cutting-edge 4G and 5G products," Xu said, "but if we don't close the technological gap, we will never win."

A "certain proportion" of this funding will come from government funding and from Tsinghua's partners, Xu said.

Hong Kong-based technology expert Paul Haswell of Pinsent Masons, the law firm behind Out-Law.com said: "Qualcomm has a large and impressive chip and patent portfolio which means that many tech companies, be they in China or worldwide, have to obtain licences from Qualcomm or include Qualcomm technology in their products."

"China has made it clear that it wishes to discourage and reduce reliance and use of US technology, and seeking to compete with or avoid Qualcomm’s dominance, especially in the wireless tech field, seems like another step in this direction," Haswell said.

Tsinghua Unigroup, a unit of Tsinghua Holdings, put together a bid last month to buy US memory chip maker Micron Technology in what would be the largest Chinese takeover of a US firm. Tsinghua Unigroup said at the time that it had received 10 billion yuan in government funding to invest in chip companies, China Daily said.

Hewlett-Packard sold the majority of its Chinese networking business to Tsinghua University in May.

The National Development and Reform Commission (NDRC) in China launched an investigation into whether Qualcomm is in breach of Chinese anti-monopoly laws in November 2013.

The NDRC's investigation relates to patent licensing matters, Qualcomm said in its annual report for 2014 (105-page / 1MB PDF).

The company is also being investigated by EU and EU competition bodies.