Qualcomm Seeks Closer Ties With China’s Tencent in Mobile Gaming

(Bloomberg) -- Qualcomm Inc. said it will work with China’s Tencent Holdings Ltd. in a partnership the U.S. company hopes will cement its technology in the world’s biggest market for mobile gaming.

The largest maker of processors that power smartphones signed an agreement with Tencent to work on mobile gaming devices that will use Qualcomm’s Snapdragon chips. The cooperation will include development of augmented reality and virtual reality technology, the San Diego-based company said Monday in a statement.

Tencent, whose WeChat social media service is used by more than 1 billion people across China, gets as much as a third of its revenue from online gaming. Improving its ties to such a powerful force in the industry is important for Qualcomm as it looks to solidify its position as the leading provider of hardware for forthcoming fifth generation, or 5G, cellular services.

The faster data speeds and quicker responses of such networks will make mobile games more realistic and interactive, Qualcomm said. By choosing to go public with the tie-up, Qualcomm is also highlighting the importance of China to its business, even amid a trade dispute being pushed by some in President Donald Trump’s administration who want to choke off China’s access to U.S. technology.

“Both parties aim to develop popular, high-quality games that can be experienced by consumers across a variety of Snapdragon platforms and devices,” the companies said in the statement.

Qualcomm, which will report earnings after the market closes Wednesday, is aiming to rekindle stalled sales growth by speeding up the introduction of 5G and spurring consumers to upgrade their phones.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Molly Schuetz

©2019 Bloomberg L.P.