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Intel said to be interested in Infineon's wireless arm

Acquisition would give the US giant a broader presence in the mobile ecosystem

By CAROLINE GABRIEL

Published: 18 May, 2010

READ MORE: M&A | Infineon Technologies | Intel | Semiconductor

German chipmaker Infineon has moved to dampen down speculation that it was in talks to sell its wireless business to Intel. However, many observers believe such talks are very much on the cards, as the German firm remains under intense financial pressure.

The reports of Intel talks surfaced in Financial Times Deutschland yesterday, citing sources at Infineon. However, today, The Wall Street Journal quoted a "person familiar with the matter" saying that Infineon was not willing to sell, despite interest from the US firm.


Such a purchase would give Intel a far broader presence in the mobile business, where its main activities currently focus on pushing its Atom processor into smaller and smaller devices. It also sells Wi-Fi and WiMAX chipsets, of course, but has failed in several past attempts to make cellphone processors or modems - most recently when it offloaded its XScale ARM-based unit to Marvell.

Infineon would bring it a wide range of cellphone products, including an integrated modem/apps processor that would go head-to-head with Qualcomm. The German firm is also strong in low end basebands, supplying Nokia's GSM range and some of its low cost 3G handsets. However, its most high profile deal is with Apple - it provides the baseband for the iPhone and iPad.

It has a top four position in basebands, with 11% global share - after Qualcomm, ST-Ericsson and MediaTek - together these four control about 75% of the market, with Broadcom gathering some pace too. Owning this Infineon business would give Intel a far stronger presence in the handset ecosystem and could lead to a more tightly integrated Atom/modem platform to compete with Qualcomm in low power devices.

Infineon's deepening cooperation with Nokia could also be attractive to Intel, which now itself works closely with the Finnish market leader - they co-own the MeeGo software platform and are working on new Atom-based devices. When Nokia broadened its silicon supply chain in 2007 and introduced Infineon to the mix, the German firm was initially confined to low end models, but last year the relationship became more strategic, with the companies initiating a collaboration on LTE Advanced. This focuses on advanced RF transceivers for future handsets or mobile internet devices that could deliver gigabit rates, and is Nokia's first publicly announced R&D in the next generation of LTE. The work could also be fed into complete modem solutions for HSPA+ and basic LTE.

While Infineon is far from out of the woods of its recent financial turmoil, its strongest business has been in its wireless activities. For this reason, CEO Peter Bauer is said to be hostile to the idea of selling this business, but he may come under pressure from shareholders to do so. Infineon first entered the mobile RFIC space 10 years ago shortly after its spin-out from Siemens.

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