China’s factories have long churned out high tech products. A big question facing Silicon Valley–underscored in a survey released Monday by Intel (INTC) and Newsweek–is how big a role the country will play in dreaming up those gadgets.

The survey found optimism among Chinese respondents and pessimism among the Americans. Some 63 percent of Chinese believe their country will overtake the United States in technology innovation over the next 30 years. Only one-third of Americans believed the U.S. would still lead over that period.

Justin Rattner, Intel’s chief technology officer, agrees that China will reduce the innovation gap with America. But that doesn’t mean that surpassing the U.S. is inevitable. “Speaking personally, there’s no reason for that to happen,” he said.

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It took a mediator–and a trip to Maui–to break the biggest logjam in landmark settlement talks between Intel (INTC) and Advanced Micro Devices (AMD). Before arriving at the agreement that ended years of acrimony and legal wrangling between the world’s largest makers of computer chips, representatives of each needed to answer one fundamental question: How much money would change hands?

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President Barack Obama has been spending considerable time on East-West trade agreements while in Asia, but for one chip maker, the negotiations between China and Taiwan are even more important.

The two countries are slowly moving toward a formalized trade agreement, called the Economic Cooperation Framework Agreement, or ECFA, that will address how their economies relate to each another. Its first iteration isn’t expected until early 2010, but Taiwan-based tech companies are already hoping to gain entry to China’s massive consumer market.

That’s especially true for Via Technologies, a chip maker running a distant third behind industry heavyweights Intel (INTC) and Advanced Micro Devices (AMD). The company, founded in 1987, made a name for itself working on an underdeveloped part of the market: small, low-power chips.

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Electronic gadgets that help people enjoy digitized books are all the rage. Most share one assumption–that their users can read. Not so the latest offering from Intel (INTC).

The company Tuesday announced the Intel Reader, a device about the size of a paperback book that is designed to digitize printed text and read it aloud to users. Intel is not targeting book lovers who want to lighten their briefcases and backpacks; its audience, the company says, is people with poor eyesight, dyslexia or other conditions that make reading difficult or impossible.

Intel, of course, is known for chips that other companies put into computers and other products. One place the company deviates from that strategy is its digital health group, which has been developing hardware and software to help medical professionals and their patients.

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Intel Corp. (INTC) Chief Financial Officer Stacy Smith said evidence is beginning to emerge that corporations are returning to technology spending, although such spending is driven more by the savings offered than by any spending increases.

“Our sales guys are picking up more interest at corporations,” Mr. Smith said in an interview Thursday. Conversations with customers, he said, are often focusing on the value proposition inherent in upgrading to new computers and servers.

“In general, what we see is that things are improving,” Mr. Smith said. The stimulus package in China has provided a direct boost to the PC market because of the government’s efforts to close the digital divide among its population. And while the European market isn’t yet showing strength, the U.S. market appears to be improving.

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Roth Capital Partners analyst Arnab Chanda this morning lowered his rating on several chip stocks to “Hold” from “Buy,” citing the risk of a modest inventory build given high projected margins and growth at Intel (INTC), Marvell (MRVL), Nvidia (NVDA) and others.

“Overall, we’re getting the sense that lead times in the semi industry have gone up a lot. There may be orders that are ‘phantom,’ or double-orders,” Chanda told me in a phone conversation this morning.

“Second, the PC end markets are probably flat year over year, but look at Intel’s [projected Q4 revenue] growth of 23 percent, Marvell’s 50 percent, Nvidia’s 80 percent–that just seems like there’s some “exuberance” embedded in that,” says Chanda.

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Intel (INTC) has admitted to some major gaffes in handling documents in an antitrust suit filed by Advanced Micro Devices (AMD), which is moving toward a trial next March. Now the chip giant says the shoe is on AMD’s foot.

Intel this week filed a motion seeking sanctions against AMD, alleging that its smaller rival failed to adequately retain and produce documents in the case and tried to hide its lapses. AMD rejects the allegations, characterizing them as an attempt to create a diversion from Intel’s own document-handling miscues.

The two companies believe the case–which AMD filed in June 2005, alleging that Intel abused its dominant market position–will generate more documents than any piece of civil litigation in U.S. history.

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When Paul Otellini, Intel’s (INTC) famously reserved CEO first heard the news, he got quiet. “The madder I get, the quieter I get,” he says, an important footnote for any Otellini user manual. He was hushed via press conference by Neelie Kroes, the European commissioner for competition.
“Intel used illegal anticompetitive practices to exclude essentially its only competitor and thus reduce consumer choice in the worldwide market for x86 chips,” Kroes read last May from the 542-page decision on an antitrust case charging Intel with unfair trade practices.

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Samsung Electronics Co.’s profits are on the rise again as its chip and display businesses recover from operating losses earlier this year. The turnaround recently helped push its market capitalization past Intel Corp.’s (INTC) for the first time.

But amid that success Samsung also is trying to address another concern: matching Apple Inc.’s ability to sell content and software that run on cellphones and other devices.

Apple’s (AAPL) iPhone has led the way in demonstrating that consumers are becoming more interested in devices that can tap the Internet or run clever applications. The same phenomenon is spreading to TVs and DVD players, which increasingly will be connectable to the Internet in coming years.

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Despite Apple’s (AAPL) investments in developing its own custom ARM microchips in place of using Intel’s (INTC) Atom mobile processors, the company has reached out to Intel as a partner to drive the adoption of the new Light Peak specification for optical cabling. A look at Apple’s historical use of ports explains why it is doing this.

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Hardware freaks flocked to San Francisco last week to hear Intel (INTC) talk about microprocessors, the electronic brains in PCs. But Advanced Micro Devices (AMD) made some pretty brainy claims of its own.

The smaller Silicon Valley microprocessor maker expanded its focus several years ago by buying ATI Technologies, known for the chips called graphics processing units that generate realistic-looking scenery in videogames. AMD says the high-end GPU it announced last week sports a whopping 2.15 billion transistors.

That’s more features than any chip now for sale by Intel, which prides itself on packing the most tiny components on a given square of silicon. AMD used a production process at Taiwan Semiconductor Manufacturing Co. (TSM) that creates lines of circuitry measured at 40 nanometers, or billionths of a meter; that is a bit finer than the most advanced chips currently on the market from Intel, which have features rated at 45 nanometers.

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Silicon Valley has been talking for 15 years or so about marrying TV and the Internet. For the most part, it’s still just talk; most people still use their PCs when they want interactivity, and rely on their TVs when they want to be passive content-watchers.

But Intel (INTC) is not giving up. The chip giant, having run along with partners down most of the blind alleys of interactive television, gave an update this week about a reformulated TV strategy that might be paraphrased as follows: it’s the software, stupid.

In other words, people don’t want to visit Web sites or engage in other PC-like activities while relaxing in front of their big-screen TV.

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For three months early this year, 63-year-old Ronald Lang was one of the most plugged-in patients in America. Lang, who suffers from congestive heart failure and multiple sclerosis, was pilot-testing the Intel (INTC) Health Guide, a device that let doctors monitor his health remotely. Each day after he woke up, he’d step on a scale and strap on a blood-pressure cuff that were attached to the Health Guide. The device collected his vitals and zapped them to his doctor’s office.

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Clearwire (CLWR) today announced the launch of its a developer version of 4G service in the Bay Area. The developer version of the WiMax-based network covers “more than 20 square miles” in Santa Clara, Mountain View and “parts of downtown” Palo Alto. (Parts? Downtown Palo Alto isn’t that big; it only cover parts of it?) Clearwire notes that the service area includes the headquarters of both Intel (INTC) and Google (GOOG); the Cisco (CSCO) campus will be adding “in the coming months.” All three companies will be
“partners” in the project, the company said.

Clearwire plans to launch full service in the Bay Area in 2010.

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