Intel will set up the global headquarters of its channel product group in China, the first United States microprocessor maker to do so.

As the domestic market has come to play an important role in the global computer and telecommunications industry, the move is to be expected, a top company executive said Tuesday in Beijing.

"China is fundamental to Intel's future," said Paul Otellini, Intel President and CEO, on his first trip to China, after he took over the posts from Craig Barrett in May.

The country is the world's second largest market for computers and the largest in terms of mobile phone users.

Otellini said "wow" to describe his company's growth from zero to US$5 billion in the past 20 years.

He added China has also become one of the most important computer manufacturing bases in the world, so the establishment of the channel product group headquarters in China will allow better execution of Intel's platform strategy and develop more solutions to meet the demands of computer makers.

Intel said it had not decided which city the headquarters will be located in, and did not announced when the move would be made.

The US giant also took a major step Tuesday in tapping the potential of the so-called digital home with its partnership with media giant Shanghai Media Group (SMG) in Beijing.

Intel and SMG will develop solutions for the production of media content optimized for broadband delivery for three different platforms - televisions, computers and mobile phones.

"We do not only want to be a content provider, but a service provider, so the technologies from Intel is very helpful to us," said Li Ruigang, president of SMG.

He said the co-operation will first be between SMG's subsidiary SMG Broadband Broadcasting, the first firm to get a licence to conduct Internet protocol TV services on both the Internet and TV sets.

He said that in the future his company will work with Intel on new technologies such as WiMAX, a wireless broadband technology promoted by the US chip maker.

Intel also announced on Monday it would establish a venture capital fund of US$200 million exclusively for the Chinese market. That compares very well to Intel's total venture capital investment of US$130 million last year.

The investment targets are Internet infrastructure companies, such as wireless broadband and consumer electronics, two areas which are also Intel's strategic focuses, according to Candol Cheung, managing director of Intel Capital for the Asia Pacific region.

Intel Capital, the US giant's venture capital arm, has invested in more than 50 Chinese companies since 1998.

Source: China Daily