All the Tech in China

BEIJING -- Last week, Intel's(INTC - Cramer's Take - Stockpickr) venture capital arm marked the one-year anniversary of its $200 million China Technology fund by announcing four more investments. It's now invested in 12 Chinese tech companies in as many months.

TheStreet.com spoke with Cadol Cheung, managing director of Asia Pacific for Intel Capital, for his take on the fast-changing China tech landscape. Cheung, who's had a 23-year career with the chipmaker, can claim to have been on the front lines of innovation in China. He spent three years as a software lab manager for Intel in Shanghai before taking up his current role.

TSC: In the past, Intel Capital has said one of its goals is to build out the PC and mobile ecosystem, to help create demand for Intel chips in both areas. Given last week's announcement that Intel has sold its communications-chip business to Marvell, will you still focus on mobile phones on the venture side?

Cheung: We're still trying to comprehend how that will affect our investment strategy. We don't have all the details yet, apart from what was announced. So to give you a short answer, I don't know.

Intel Capital president Arvind Sodhani was recently quoted saying he was seeing more innovation in China. Can you elaborate on that?

We started investing in China in 1998, and I've been with the Intel Capital team since 1998. Over the time I've been here, I've seen [Chinese] companies move from not only producing products, but also having their own innovations, their own intellectual property.

For example, one of the companies we announced we'll be investing in [last] Monday, Montage Technology, is producing mixed-signal ICs. There's some very interesting technology from that company that may be usable for Intel.

[Compared to a few years ago,] the market is more open, more competitive. Just copying something for [and adapting it to] domestic use is no longer the formula.

In general, we see a few business proposals a week. Just by looking at these business proposals, we've started seeing more and more companies being innovative, either on the business model or technology or product design.

A year and a half ago, venture capitalists were saying Chinese tech companies were getting very pricey, and it was looking like a bubble. Do you think the situation has gotten better or worse?

Now you hear [even] stronger comments that yes, things keep going up. High valuations are a concern. I know international VCs who invest both in the U.S. and China say things are [still] going up.