US-based Qualcomm Inc. has committed to significantly increase its investment portfolio in China in its bid to expand the company's server chip business in the mainland.

According to Derek Aberle, president of Qualcomm, the company's expansion plans are fueled by the explosive growth in China's internet data centers, as well to take advantage of opportunities in the country's Internet Plus initiative, China Daily reported. 

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The American chip giant recently unveiled its new investment arm in the country called Qualcomm (China) Holding Co Ltd, in Guiyang, Guizhou province, which aims to look into opportunities in potential growth areas such as the Internet of Things

"The server chip business is very investment-intensive," Aberle noted in an exclusive interview with China Daily on the sidelines of the ongoing China Big Data Industry Summit in Guiyang. "In the next five years, we have to invest a lot of money before we see our return."

But despite the huge investments Qualcomm intends to make in China, the top executive is optimistic that his company's joint venture with Guizhou Huaxintong Semiconductor Technology Co will be "one of our biggest growth engines (in China)" in the next five years.

"We want to enable the joint venture to build up its own capability and be able to take our technology and develop its own systems on chips for the China market," he said.

Qualcomm is now in the process of developing other "growth points" for its global enterprise, as the sales performance of its chips for smartphones and tablets have been affected by the sluggish growth of the global smartphone market.

Qualcomm's decision to increase its investments in China may therefore have come at an opportune time, as the country has intensified its efforts to upgrade its traditional industries with the aid of information technology.

This development has led to a boom in the number of internet data centers across the country, and consequently, has created  a huge demand for server chips.

This is the reason why Qualcomm is now manufacturing server chips that are based on the ARM architecture, a chip design that is widely used in smartphones and tablets.

Roger Sheng, a senior analyst at research firm Gartner Inc, however is unsure how Guizhou Huaxintong will help Qualcomm break into the Chinese server chip market, considering that the the mobile chip leader has limited experience in this area.

"It is still unclear whether ARM can offer computing power strong enough to support data centers," Sheng noted.

But Aberle remains unfazed by these challenges, as he believes that the company's scale and power in the mobile chip business will give it an edge in the server chip market and make Qualcomm's investments in China worth every penny spent.

TagsQualcomm, Qualcomm china, Qualcomm China Investment