Samsung also in talks with Infineon?

Korean giant rumoured to be vying with Intel for a wireless merger or joint venture

CAROLINE GABRIEL

Published: 21 July, 2010

Infineon is heavily tipped to sell its wireless chip business to Intel, but according to German press reports, it is also exploring a sale to, or joint venture with, Samsung. Such a deal could make the Korean giant significantly more self-sufficient in chips for its cellphone division, as well as giving Samsung Electronics a full wireless play.

Samsung's various divisions have not always given one another preferential treatment in the past, but in the past year, its Electronics unit has sold more processors to the handset division, notably its gigahertz application processor Hummingbird, a rival to Qualcomm Snapdragon and Texas Instruments OMAP.

It now seems that Samsung Electronics may want to be able to provide the full platform for smartphones and other wireless devices, not just the app processor and memory chips. Infineon would provide it with 2G and 3G basebands and a highly integrated modem/processor architecture, which has found favour with Nokia and Apple as well as Samsung itself.

Such a system would not just make Samsung's handset unit more self-sufficient but increase its offering for the merchant market. The phone chip sector is going through a process of consolidation as prices and margins fall - Renesas recently acquired Nokia's modem activities, for instance. A move by Samsung would also wrongfoot Intel, preventing the semiconductor leader from achieving a full-play smartphone platform itself, to support its current attack on this market with its Atom processor.

The talk of a Samsung-Infineon deal surfaced in German publication Manager Magazine but neither firm would comment. Two years ago, Samsung greatly extended its purchasing of cellphone chips from Infineon, largely at the expense of Qualcomm.