Intel will pay cash for Infineon's wireless unit
By Nicola Leske |
August 31, 2010, Tuesday
|
Print Edition
Print Edition
INTEL will buy German chip maker Infineon's wireless unit for US$1.4 billion, enabling the US chip maker to boost its presence in the smartphone market.
The cash transaction is expected to close in the first quarter of 2011 and the mobile unit will remain as a standalone business, the companies said in a statement yesterday.
This is the second major deal for Intel within two weeks after the company announced its US$7.7 billion offer for McAfee Inc on August 19, its largest acquisition, bolstering the appeal of its chips as it tries to expand further into the mobile market.
Intel's Atom mobile chips took the low-cost, no-frills netbook market by storm but are rarely found in smartphones where other chip makers dominate.
"Infineon would make Intel an instant heavyweight (in the mobile space) and buy them three, four years in R&D," IDC analyst Flint Pulskamp has said.
Analysts also caution that while an acquisition such as Infineon's mobile chip unit is a good step it will take time to produce results.
Meanwhile, rivals based on UK-listed ARM's chip design - which is said to be more power-efficient than Intel's offerings - continue to grab market share.
The deal will allow Infineon to focus on its core segments - automotive, industrial and chip card security.
"The sale of WLS is a strategic decision to enhance Infineon's value," Chief Executive Peter Bauer said.
"We can now fully concentrate our resources toward strong growth in our core segments."
Bauer, who took the helm in mid-2008, turned around the mobile chip unit after years of losses.
It now generates around 30 percent of Infineon's total revenue but it ranks No. 5 in the chipset industry, far behind sector giants Qualcomm, Texas Instruments and Broadcom.
Infineon supplies chips to top manufacturers such as Nokia, LG and Apple.
Asset sales may also open the door for a special dividend for Infineon shareholders.
The cash transaction is expected to close in the first quarter of 2011 and the mobile unit will remain as a standalone business, the companies said in a statement yesterday.
This is the second major deal for Intel within two weeks after the company announced its US$7.7 billion offer for McAfee Inc on August 19, its largest acquisition, bolstering the appeal of its chips as it tries to expand further into the mobile market.
Intel's Atom mobile chips took the low-cost, no-frills netbook market by storm but are rarely found in smartphones where other chip makers dominate.
"Infineon would make Intel an instant heavyweight (in the mobile space) and buy them three, four years in R&D," IDC analyst Flint Pulskamp has said.
Analysts also caution that while an acquisition such as Infineon's mobile chip unit is a good step it will take time to produce results.
Meanwhile, rivals based on UK-listed ARM's chip design - which is said to be more power-efficient than Intel's offerings - continue to grab market share.
The deal will allow Infineon to focus on its core segments - automotive, industrial and chip card security.
"The sale of WLS is a strategic decision to enhance Infineon's value," Chief Executive Peter Bauer said.
"We can now fully concentrate our resources toward strong growth in our core segments."
Bauer, who took the helm in mid-2008, turned around the mobile chip unit after years of losses.
It now generates around 30 percent of Infineon's total revenue but it ranks No. 5 in the chipset industry, far behind sector giants Qualcomm, Texas Instruments and Broadcom.
Infineon supplies chips to top manufacturers such as Nokia, LG and Apple.
Asset sales may also open the door for a special dividend for Infineon shareholders.
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