Intel said it will pay as much as $1.5 billion for a 20% stake in two mobile chipmakers with ties to the Chinese government.
The company hopes the deals will help it catch up in a smartphone chip industry dominated by rival Qualcomm.
Intel will acquire the stakes in Spreadtrum Communications and RDA Microelectronics through a deal with Tsinghua Unigroup, a government-affiliated private equity firm which owns the two mobile chipmakers.
The US semiconductor company, more known for chips used in personal computers, has struggled to gain traction in the smartphone and tablet market.
The landmark deal would give Intel a greater foothold in the Chinese mobile chip market, which has become a nexus of the global smartphone industry.
The deal will also provide the two Chinese chipmakers support from a US semiconductor giant on chip design and development, an area deemed to be of vital strategic importance by the government in Beijing.
"It has become a national priority of China to grow its semiconductor industry," said Tsinghua Unigroup Chairman Zhao Weiguo in a statement released by Intel today.
"The strategic collaboration between Tsinghua Unigroup and Intel ranges from design and development to marketing and equity investments, which demonstrate Intel's confidence in the Chinese market and strong commitment to Chinese semiconductor industry," he added.
Unigroup is controlled by the prestigious Tsinghua University in Beijing. The institution counts China's President Xi Jinping as one of its graduates.
The government in Beijing has said that it views semiconductors as an industry of vital strategic importance and hopes to spur its development domestically.
Since Brian Krzanich took the CEO position last year, Intel has pursued an array of deals and strategies to ensure its chip technology gets into more smartphones and tablets.
The newest investment comes less than six months after Intel reached an agreement with Chinese chip maker Rockchip to make inexpensive tablet chips with Intel's architecture and branding.
The CEO has also opened the chipmaker's prized, cutting-edge factories to paying customers. More recently he has struck partnerships in the fashion world with companies such as Fossil and Opening Ceremony to design stylish smart clothing.
Intel shares have risen 32% this year, in part because of stabilisation of demand for personal computers.
With demand for smartphones cooling in the US, manufacturers have increased their focus to China, where demand is strong for handsets priced under $150.
