Intel Corp is building its first global development center for smart devices in Shenzhen, the world's largest consumer electronics manufacturing hub, as its chief executive looks for profit growth from mobile devices in a post-personal computer era.

The US chipmaker is also starting a $100 million fund in China to encourage startups in the mobile sector, CEO Brian Krzanich, appointed to the post in May 2013, said on Wednesday. Intel is targeting 40 million tablet chip shipments in 2014 compared with 10 million last year.

"We have missed the tablet, but we will grab future trends, including wearable devices and the Internet of Things," Krzanich said.

The Shenzhen innovation center, primarily working on tablets, PCs and smartphones employs 300 people and will "grow with the ecosystems", Anthony Neal-Graves, head of Intel's research and development team in China, said. Intel isn't disclosing the scale of investment in the new facility, he said.

Shenzhen's position as the world's busiest mobile device manufacturing base was an obvious reason for Intel to set up research and development operations in the city.

James Wang, an analyst at research firm Canalys said Intel's move in Shenzhen will position itself as a "competitive challenger" in the cost-competitive tablet market.

Intel is subsidizing original equipment manufacturers (OEMs), who face additional costs by switching to Intel's chips, so the company can gain momentum in 2014, Wang said.

"By building the innovation center in Shenzhen, Intel can incorporate more local independent design houses and cost-competitive component suppliers into its tablet reference designs, which will eventually make Intel more price competitive with its ARM-based rivals," he said.

Besides targeting Chinese OEMs, analysts believe the new investments will also help Intel gain more design wins from tier one vendors such as Acer Inc, ASUSTek Computer Inc and Hewlett-Packard Development Co LP.

The companies are increasing their shipment of cost-competitive products.

Chinese mainland vendors, such as ZTE Corp and Lenovo Group Ltd, are also pursued by Intel for x86 powered phones and tablets.

Intel dominated PC chip manufacturing over past decades but gradually lost its edge to competitors because smartphone and tablet chips need stronger power efficiency.

Intel's x86-based chips were famous for high computing performance with power demands exceeding the capability of mobile devices. The British-designed ARM architecture quickly gained market share by compromising some computing ability to power efficiency.

Intel's total investment in China has reached $4.5 billion. It has R&D teams in Beijing and Shenzhen and manufacturing plants in Chengdu and Dalian.

Global smartphone shipment exceeded 1 billion units last year, a 40 percent year-on-year jump, according to a report by International Data Corp. China's smartphone shipments could hit 360 million this year.

By the end of 2017, the total consumer smart device install base in the nation will reach 1.2 billion, IDC said.

gaoyuan@chinadaily.com.cn

(China Daily USA 04/03/2014 page16)