Intel closes in on Infineon, insiders say
Announcement could come within the week, bringing Intel baseband and ARM platforms
Published: 27 August, 2010
Intel is close to the much rumoured acquisition of Infineon's wireless unit, according to Bloomberg - a move that would boost the giant's faltering steps into mobile devices, and bring it an ARM-based architecture again.
It would also help avert the fate predicted by some analysts this week, of being overtaken by Samsung in the global semiconductor market, which Intel has led for decades. Samsung has also been rumored to be interested in Infineon, as it expands its own mobile devices chip business rapidly. Its need for the German firm's baseband and connectivity activities - and more importantly, its tier one cellphone customer base - is less urgent than Intel's, though the fit with its existing product strategies would be easier.
According to three people "with direct knowledge of the discussions" who spoke to Bloomberg, Intel CEO Paul Otellini has personally taken the initiative to restart stalled talks and an announcement could even come this weekend. Infineon, Europe's second largest chipmaker, said to be asking about €1.5bn ($1.9bn) for its wireless unit and has made it clear it does not absolutely need to offload the business, which is profitable and has helped carry it through recent financial storms, and will hold out for the right price. The Infineon unit had revenues of €346m in its fiscal third quarter, up 38% year-on-year, mainly because of the "ramp-up of new smartphone and entry level phone platforms at several major customers".
Infineon's cellphone unit has made most of its market impact at the low end, with its highly integrated baseband/processor architecture for 2G and 3G. But it has won some baseband deals in higher end devices too, notably the Apple iPhone family and the Samsung Galaxy S. Samsung's handset arm has been diversifying away from its traditional reliance on Qualcomm and has been coming closer to Infineon, alongside its own chip arm's app processors. This has made some analysts see synergies between Samsung Electronics and Infineon.
Infineon said on August 2 that it had made "significant progress" in talks with potential buyers, though it did not identify them.