NEW YORK (TheStreet) -- Intel(INTC) - Get Report , the semi-conductor maker, confirmed Friday that it had made a $1.5 billion investment for a 20% stake in Chinese state-backed Tsinghua Holdings, a chipmaker that will produce Intel-branded chips for mobile phones and other electronics.

Intel's bet is that Tsinghua Holdings, which owns wireless chipmaker Spreadtrum (SPRD) , will give Intel much-needed exposure in the low-cost smartphone market, particularly in China, which is the world's largest smartphone market and has the largest base of Internet users.

Research firm IDC forecasts that tablet shipments will grow by 80% over the next three years, reaching 386 million (72 million in 2010). If Intel is successful at producing its own branded tablet in a fast-growing Chinese market, it could have a meaningful impact on revenue given that the company had already set a goal of shipping 40 million tablets for 2014. 

This is a solid deal for Intel and its shareholders because it will help Intel narrow the gap that exists between Intel and wireless leaders Qualcomm(QCOM) - Get Report and ARM Holdings (ARMH) . The deal comes only four months after Intel announced a partnership agreement with Rockchip, a Chinese-based semiconductor company, aimed at expanding Intel's mobile/tablet presence in Asia.

The move comes with the resurgence of PCs and Intel's advances in the Internet-of-Things, from which management expects 17% growth (compounded) by 2020. Intel was dropping 0.6% to $33.94, trimming its 2014 advance to 31%.

As with Rockchip, Intel is joining forces to seize market share in lower-priced devices segments that are powered by Google's(GOOGL) - Get Report Android. Following the Rockchip deal, Intel immediately set a goal to ship 40 million tablet in 2014, which would represent a 300% year-over-year jump.

In Spreadtrum, Intel is looking for a similar tradeoff.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

TheStreet Ratings team rates INTEL CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTEL CORP (INTC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

You can view the full analysis from the report here: INTC Ratings Report