Chip designer MIPS Technologies Inc MIPS.O said China-based Nationz Technologies (300077.SZ) has licensed its microprocessors for use in mobile payment products.
MIPS shares rose as much as 7 percent in morning trade.
The Sunnyvale, California-based company said Nationz will use its microprocessors in radio frequency-enabled SIM card payment products (RFID-SIM), used widely in mobile phones.
Nationz mobile payment SIM cards enable users to make payments, transfer money between accounts, and shop on the go.
Terms of the licensing deal were not disclosed.
China, the world's largest mobile phone market, has over 1.02 billion mobile phone users, with a little over 10 percent using smartphones.
Shares of MIPS were trading at $6.52, up 5 percent. The stock, which has risen 35 percent this year, closed at $6.21 on the Nasdaq on Wednesday.
(Reporting by Siddharth Cavale in Bangalore; Editing by Joyjeet Das)