Plugging a massive product gap, Intel said Monday that it will pay $1.4 billion for Infineon's wireless-chip business, effectively gaining a ticket into the late innings of the 3G mobile game.
Intel plans to integrate the Infineon technology, but not the operations, into its nearly absent mobile-device strategy.
Tellingly, Infineon is happy to unload a business that supplies the scorching hot smartphone segment and says it looks forward to working in automotive and security chip development. It isn't a coincidence that the deal comes as Apple's plans to expand its iPhone into the CDMA -- read Verizon (VZ - Get Report) -- market where Qualcomm is dominant.Infineon makes wireless signal processing chips for 2G and 3G networks and has been the top radio-chip supplier to Apple's iPhones. But 4G technology threatens to shake up the industry. The path to 4G is long-term evolution (LTE) systems. This is an area where Infineon has strived for early design wins but has yet to nail down any significant success. No doubt Intel plans to make it big in 4G someday, but for now, the company says it will use Infineon's 3G technology in its laptop, netbook and tablet component business. UBS analyst Maynard Um doesn't see Intel's Infineon deal as a major threat to Qualcomm, where it has strong Google (GOOG) Android momentum and faces the arguably inevitable arrival of the Verizon iPhone. For Intel, the focus on wireless will help take investors' eyes off the declining PC chip business that caused the company to cut guidance last week.
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