By Stephen Nellis
(Reuters) - Qualcomm Inc (O:QCOM) and Tencent Holdings Ltd (HK:0700) said on Monday they will cooperate on projects that could include making the Chinese company's videogames play better on devices with Qualcomm chips, and create a 5G version of a Tencent-backed gaming phone.
Qualcomm is the largest supplier of mobile phone chips that power many Android devices. With a market capitalization of about $453 billion, Tencent is China's largest mobile software company, and owns WeChat, the nearly ubiquitous social network.
Tencent, among the world's largest gaming companies, reported sharply lower profits last year after the Chinese government stopped approving games for several months. Tencent received permission to launch major title Perfect World Mobile in the January-March quarter.
Under the agreement, future Tencent games could be "optimized" for Android phones that run Qualcomm's Snapdragon Elite gaming chips, the companies said in a statement.
They have already worked together on a gaming phone. Earlier this month, Tencent paired with Asustek Computer Inc's (TW:2357) gaming device division, Republic of Games, to introduce a gaming phone with a Qualcomm chip.
Tencent and Qualcomm also plan to jointly develop a 5G version of the gaming phone, which could help bolster Tencent's plans for a streaming game service.
The faster connection speeds of 5G devices could allow the streaming of more complex games to mobile devices. U.S.-based Microsoft Corp (O:MSFT) and Alphabet Inc's (O:GOOGL) Google have also launched streaming game services.
"Mobile gaming, an important 5G use case, will soon take advantage of the next generation of connectivity," Qualcomm China Chairman Frank Meng said in the statement.
"Faster speeds, more bandwidth, and cutting edge ultra-low latency will support real-time, multi-player and immersive gaming experience."
Tencent is working on a cloud-based back-end service called Instant Play that game developers could use to power streaming games. Microsoft is offering a similar service in its Azure cloud computing service.
Tencent has not revealed plans for its consumer-facing streaming service, but many analysts expect one.
The cooperation agreement could also include tweaking game titles for U.S. laptops powered by Qualcomm's processors and connected to the Internet via 5G, rather than more traditional Wi-Fi chips.
(This story was refiled to correct day of week in first paragraph)