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Asia Semiconductors

Qualcomm’s China Chip Joint Venture to Shut Down

A joint venture between Qualcomm and the government of a rural Chinese province to make server chips will wind down by the end of the month, according to 10 employees at the venture.

Executives at Huaxintong Semiconductor, or HXT, which was formed in 2016 with the Guizhou provincial government, said in internal meetings on Thursday that the venture would shut down by April 30, according to the employees. A spokeswoman for HXT declined to comment.

Altogether, Qualcomm and Guizhou had invested a combined $570 million in HXT as of August 2018, according to HXT’s corporate filings.

The Information reported earlier this month that HXT’s work on future chips had either stalled or slowed and that its CEO had been replaced. The move came after Qualcomm scaled back its investments in server chips based on hardware architecture built by Arm, which was the underlying technology of HXT’s chips. Although China is pouring tens of billions of dollars into its domestic semiconductor industry, HXT’s failure highlights how some of the country’s state-backed ventures, especially those led by local governments, are struggling to become viable businesses.

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