BEIJING—Intel Corp. said it is starting a joint research center with Tencent Holdings Ltd. of China to develop technologies and services for tablet-style computers and other mobile devices in the booming Chinese market.
The initiative pairs the U.S. chip giant with one of the biggest Chinese Internet companies as Intel strives to attack the fast-growing tablet segment, which is now dominated by competitors.
Under the agreement, which Intel announced Tuesday, the Santa Clara, Calif., company will focus on developing hardware and operating systems while Tencent will focus on services, user experience and products for joint projects.
About 60 engineers from Intel and Tencent will work together in the China research center on products and services for tablets and gaming. The companies expect to eventually increase the number of engineers to 200, and to expand their areas of research to technology related to online services that can integrate multiple devices including handsets, personal computers, television sets and vehicles.
Intel is struggling to catch up in the tablet market, now dominated by chip designs licensed by ARM Holdings PLC that are used in consumer devices including Apple Inc.'s iPad and devices running Google Inc.'s Android operating system.
Although Intel reported strong growth last year, the popularity of the iPad and other similar devices has become a threat to Intel by undercutting sales growth for PCs, where Intel's chips have long been dominant. ntel also took a hit in February when Nokia Corp. chose to focus on using handset software by Microsoft Corp. instead of Meego, a mobile operating system that Nokia had developed with Intel.
Intel on Monday announced a new set of chips specifically designed for tablet-style devices. It said the product line has been selected for a number of business-oriented tablets.
In China, Intel is also working with Chinese telecommunications equipment and handset maker ZTE Corp. on research and development, the Chinese company said.
A ZTE representative declined to give details, but denied a report that ZTE and Intel have already jointly developed a new phone.
For Tencent, which popularized instant-messaging in China, the new innovation center highlights the Shenzhen-based company's growing ambitions to develop its business beyond its core messaging services, online games and social-networking in China, which has more than 878 million mobile subscriber accounts and more than 450 million Internet users.
Tencent has expanded its portfolio over the past year to include a number of high-profile partnerships, including indirect investments in Facebook Inc. and social-gaming company Zynga Inc. through its stake in Russian Internet investment firm Digital Sky Technologies. Tencent recently partnered with Groupon Inc. to launch a Chinese daily deals website called Gaopeng.com.
Tencent also has had talks with News Corp. about buying social-media and entertainment site Myspace, according to people familiar with the matter. News Corp. owns The Wall Street Journal.
Write to Loretta Chao at loretta.chao@wsj.com
Read more: http://online.wsj.com/article/SB10001424052748703518704576258182389923812.html#ixzz1JMf7W1Ga
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