Intel, which has been eyeing the market for chips that drive smartphones, has said it will acquire about a 20% in China's Tsinghua Unigroup, which owns China's second-largest and third-largest chip designers Spreadtrum Communications and RDA Microelectronics.
Intel has agreed to invest $1.5bn (£920m, €1.2bn) for the minority stake in state-owned Tsinghua Unigroup, which owns the two fabless semiconductor firms.
The move is expected to boost the American chipmaker's access to the world's biggest mobile market.
The investment in Tsinghua will see the firms jointly develop Intel-based chips for mobile phones, for China and other markets.
Intel said in a statement: "Under the terms of the agreement, Spreadtrum Communications will jointly create and sell a family of Intel Architecture-based system-on-chips (SoCs). Initial products will be available beginning in the second half of next year and will be Intel Architecture-based SoCs sold by both companies."
Intel CEO Brian Krzanich said in the statement: "China is now the largest consumption market for smartphones and has the largest number of Internet users in the world.
"These agreements with Tsinghua Unigroup underscore Intel's 29-year-long history of investing in and working in China. This partnership will also enhance our ability to support a wider range of mobile customers in China and the rest of the world by more quickly delivering a broader portfolio of Intel architecture and communications technology solutions."
Intel's stock has gained some 32% so far this year.
Intel has its own factories in China. The Tsinghua deal follows the firm's announcement in May of a partnership with another growing Chinese chip maker, Fuzhou Rockchip Electronics.
The Fuzhou agreement will see the firms develop inexpensive tablet chips with Intel's architecture and branding.