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Summary:

In an effort to gain a toehold in the smartphone business, Intel is inching closer to acquiring the wireless business of German chip maker, Infineon. Analysts believe that this deal is likely to have a big impact on the wireless chip industry.

Intel has a contract to acquire the wireless division of German chip maker, Infineon, according to brokerage Rodman & Renshaw’s Ashok Kumar, who said so in a note to his clients today. Intel has been long rumored to be in talks with Infineon, and this is the first hint that the deal is progressing.

Intel has no option but to go after the smartphone business — widely recognized as the next major opportunity for the chip industry. The chipmaker, as I have said time and again, is a wireless laggard. With this rumored deal, it will only be trying to play catch-up with its rivals, especially Qualcomm, which many believe is one of the best-positioned mobile chip companies because it makes both the “brains” of smartphones and the radios. Right now, Intel only has the brains. In his note, Kumar sums it up well:

Qualcomm remains the best positioned company for the smartphone opportunity as it has requisite IP for all the major wireless interface standards in play. But there are several companies that are positioned poorly for the smartphone opportunity and are not likely to survive. Texas Instruments lacks baseband processors for future standards. Infineon is without application processors and Marvell has had only limited success to date. MediaTek remains strong at the low end.

Qualcomm has taken an early lead by becoming a major supplier to the Android ecosystem, especially to HTC. Qualcomm holds an equity stake in the fast-growing smartphone maker, and has become a major contributor (in terms of software) to the Android ecosystem. It has also been pushing the speed limits of its Snapdragon-based chipsets.

Kumar says that the company most likely to suffer is Broadcom, which he points out has been unable to develop compatible baseband modems and now has to fight off both Intel and Qualcomm. Broadcom, which wants to get 10 percent of the overall wireless chip business, “will continue to bleed money in the cell phone business and will likely exit after limited success,” Kumar notes. I am not sure I agree with him entirely.

In theory, Intel and Infineon together could challenge Qualcomm’s growing dominance. After all, Infineon has baseband chips (the radios) and the customer base, and Intel has the application processors. However, Intel has a history of botching up acquisitions and has proven time and again that it can’t look past its PC-centric DNA.

Related content from GigaOM Pro (sub req’d):

As Devices Converge, Chip Vendors Girding for a Fight

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  1. Half of this article is BS and speculation. Can you please quote some real market expert in this area which would make sense to this kind of topic. Is that too much to ask?

    Oh wait, the modern world enjoys sheep speculations and lack of facts so much.

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  2. Can you tell me what is wrong with the this article and what is speculation? It is easy to throw allegations from behind the “anonymous” mask as well.

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    1. Smart(Phone)Ass Monday, July 26, 2010

      “After all, Infineon has baseband chips (the radios) and the customer base, and Intel has the application processors”. Whether Intel manages to retain the current Infineon customer base after acquision is the key to Intel’s success.

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  3. No offence OM. I have a problem with Infineon’s rumors off late. Even last week it was linked with Samsung and some unknown Russian equity. I think some people are taking advantage of these rumors to move the stock. That’s my problem.

    As a respected journo, I expect you to verify some facts before publishing some sensational headlines.

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    1. Anonymous-please clarify Monday, July 26, 2010

      “Intel has a contract to acquire the wireless division of German chip maker, Infineon, according to brokerage Rodman & Renshaw’s Ashok Kumar, who said so in a note to his clients today”

      Om is simply pointing out an analyst note, clearly IDing him and adding his expert comments. If you disagree, its your prerogative. Why do you assume and how do you know that he hasnt verified?? You are accusing him of something with no facts.

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  4. Om, I think your article is missing a key player, which is Samsung. Samsung chips power the Galaxy S and iPhone, going forward, Snapdragon, OMAP and the Samsung hummingbird SOCs are going to be major players int the smartphone/tablet game, IMO. X86 is way too power hungry.

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  5. [...] Ashok Kumar von Rodman & Renshaw hat seinen Kunden einen entsprechenden Deal in Naher Zukunft angekündigt – der Vertrag stehe bereits. Durch die Übernahme würde Intel ebenso wie Qualcomm nicht nur [...]

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  6. [...] week’s rumors that Intel is about to acquire Infineon’s wireless chip business to make a run at the smartphone market bring this question front and center. Infineon is Apple’s [...]

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  7. [...] week’s rumors that Intel is about to acquire Infineon’s wireless chip business to make a run at the smartphone market bring this question front and center. Infineon is Apple’s [...]

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  8. [...] week’s rumors that Intel is about to acquire Infineon’s wireless chip business to make a run at the smartphone market bring this question front and center. Infineon is Apple’s [...]

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  9. [...] It has been rumored for months that Intel, the largest chipmaker in the world was close to buying German semiconductor [...]

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