SMIC Chief Executive Officer Richard Chang said that the deal, which will see SMIC make cellphone chips for Qualcomm at its Tianjin plant, could result in an expansion of the facility.

Behrooz Abdi, senior vice-president and general manager of Qualcomm's CDMA Technologies, said the total value of orders could reach US$120 million within three to five years.

Shipping of the chips, mainly power-management devices, is likely to start before the end of this year.

With manufacturing facilities in Beijing, Shanghai and Tianjin, 44 percent of SMIC's revenue already comes from US-based customers.

SMIC's wafer shipments rose 26 percent year-on-year in the first half of 2006.

Qualcomm's initial foundry partners were IBM, Samsung and Taiwan Semiconductor Manufacturing Co.

It added Singapore's Chartered Semiconductor Manufacturing Pte Ltd to the list earlier this month.

Abdi said the fabless manufacturing model, which Qualcomm introduced to China, could help drive the development of China's fledgling integrated circuit industry.

"We are able to focus on our core strength of technological innovation, while enabling our partners to focus on their core strengths for example, SMIC with their supply chain and operations expertise," he said.

"Qualcomm's integrated fabless manufacturing model helps create greater partnership and collaboration with the entire supply chain. This model also provides very significant benefits for the industry in China, in particular by helping local enterprises achieve success and ensuring China is as a source for high-quality semiconductor products."

The Qualcomm-SMIC partnership will make it easier for leading Chinese telecom firms such as Huawei Technologies and ZTE Corp to obtain Qualcomm's chips for their mobile phones.

ZTE announced last month that it had shipped 10 million handsets based on the CDMA (code division multiple access) standard, a standard in which Qualcomm is a trailblazer.

Qualcomm's chips power the majority of third-generation (3G) mobile devices globally.

China's 3G roll-out, expected to take place over the next two years, could give Qualcomm a massive boost.

China currently accounts for 16 percent of Qualcomm's global revenue, compared to 8 percent in the 2004 fiscal year.

(China Daily September 26, 2006)