Blog Post

Intel May Buy Infineon's Mobile Chip Business

Intel (s intc), the PC chip giant, in its efforts to aggressively diversify into the mobile semiconductor business is looking at acquiring German chip maker Infineon’s mobile chip division, according to the German edition of the Financial Times.

Infineon, which supplies chips to Nokia (s NOK), RIM (s RIMM) and Apple (s AAPL), among others, is one of the smaller players in the industry dominated by the likes of ST Ericsson (s eric), Texas Instruments (s txn) and Qualcomm (s qcom). By selling the unit to Intel, it’s being given a chance to scale up, especially as Intel looks to diversify its business beyond PC-centric x86 chips.

I have been very critical of Intel’s foray into the mobile chip industry. Buying this Infineon division would be the right move, but as to whether it’s enough, I’m not so sure. The company in the past has tried to buy its way into new markets such as optical and wireless but failed and was forced to retreat. However, the current shift to the Mobile Internet is too disruptive for Intel to ignore, so it has to do something. It might as well start by buying Infineon’s mobile chip business.

7 Responses to “Intel May Buy Infineon's Mobile Chip Business”

  1. mouse

    This is the rigth move for both Intel and Infineon.
    Intel get Fabs ready to ramp any Wireless technoly
    Intel will then capitalize it’s inventory as well as addressing volume demand for the western world meeting the correct TTM.
    Infineon get no choice other than getting rid of it’s com bus.
    It’s the first time in Infineon histry where com is going Green.
    Neverthless Infineon will not be able to tackle Hungry Wireless customers needs (Nokia, RIM, Samsung, Apple,……). As it’s going semi fabless as well as having limited Headcount to address requirements.
    Hiring 3xtimes actual headcount will cost cash and dump the share and the free cash flow, over 2 years, and this the venture capitals won’t accept. Into the volatile COM market.
    If the deal is not done. Infineon wireless will be similar to the Qimonda business and will harm Infineon global semi-conductor future.
    Selling it will bring Infineon as number One WW at the automotive market and chip card. Shares will increase …..
    As well as having a strong Support (EDA – DA) organisation will bring Infineon as well as Intel to the TOP.
    Going ahead of Asian big players.
    Last Infineon can’t afford competing with so narrowed price margin within COM business. While Intel can do.
    So Good and strategic successful move for both.
    The only issue will be a significant redundancy at CEO – 2/3/4 top managers positions, in case of acquistion.

    • bitlogic

      completely agree with your though, would like to point few more facts as of now Infineon is playing in single chip solution by integrating Modem, RF & PMC or they have stand alone modem solution which are mainly focused on doing wireless technology work along with some multimedia fatures. With Intel accuring them, Intel will get whole ecosystem and will become preffered supplier with full platform to devices like netbook (which they are already but with Modem integrated), i-pad devices which chinese company will introduce, Mobile phones high end and then PDA’s. Think they had already signed deal with Nokia and having linux platform through MeeGo,
      Everything in place and they will become force to reckon with inMobile industry.
      What Infineon gains is process technology and less cost production material this will enhance there position along with huge money backup to for the kill in stand alone Modem arena.

  2. Om,
    Correction, Infineon is not a small player, the company was part of Siemens till recently. Infineon is well known as memory chip maker. They were in constant legal fights with Rambus over digital memory patents. Rambus fought tooth and nail with Infineon five years back. I highly doubt Infineon has anything to offer as a mobile processor. However they do have good expertize in memory and semi conductors in general. Nevertheless its a good move.

      • Om,

        This seems a bit of an odd couple.

        Infineon recently spun off its Wireline business. Now if it sells Wireless business (including WLAN?), the Communications division dissolves.

        So, you think Infineon would just run its Automotive business? Do you think this may be a JV as these European players seem to like to do?

        Regards, Ram