Qualcomm turns to China's Allwinner to grow in low-cost tablet market

As part of the agreement, Allwinner will push Qualcomm's Snapdragon 410 and 210 chips with integrated LTE into low-cost Android tablets distributed worldwide. Allwinner mainly distributes Wi-Fi-only chips for tablets under US$200, and its LTE lineup will be filled up by Qualcomm Snapdragon chips.

The deal offers an opportunity for Qualcomm to grow in the Chinese market, where the company was hit with problems in recent years. Qualcomm in February paid US$975 million to settle a fine imposed by the Chinese government for monopolistic business practices.

The number of tablets shipping with LTE is growing, and the partnership will fill up a big void in Allwinner's tablet chip lineup, said Tim McDonough, vice president of marketing at Qualcomm, during a press conference at Computex in Taipei on Tuesday.

The deal shows how U.S. companies are increasingly partnering with Chinese companies who have better distribution channels and understanding of the local market. Intel last year partnered with Rockchip to design and distribute custom x86 chips for low-end smartphones and tablets in the Chinese market. In a bid to sell more enterprise hardware, HP last month sold a majority stake in its China server and storage business to Tsinghua Holdings as part of a joint venture called H3C.

Qualcomm is not making an equity investment in Allwinner, McDonough said.

Qualcomm and Allwinner both make ARM-based processors. However, Qualcomm has done better in smartphones than tablets. HP sells low-cost Android tablets with processors from Allwinner, and Walmart sells some models as well.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com