Infineon Technologies Losing Its Memory

Infineon joins Advanced Micro Devices(AMD), which has filed IPO registration documents for Spansion, its memory subsidiary that is a joint venture with Fujitsu. Other companies have sold their memory divisions outright, as Texas Instruments(TXN) did when it sold its memory unit to Micron(MU) in 1998.

But exiting the memory business is a double-edged sword for a company like Infineon, because logic and memory could increasingly be integrated into a single chip as the market for consumer electronic gadgets evolves. "You almost want to keep that capability as you go after the higher-end logic components," said McGregor.

And it remains to be seen whether Infineon's memory unit can survive on its own, without the cushion that comes from being part of a larger, diversified company. Samsung, one of the world's major memory makers, can handle swings in that sector because of revenue from its various other businesses, like consumer electronics and flat-panel displays.

"It's really hard to be in a commodity market when you have to weather the swing without a parent that has other products that can help you out," McGregor says. "I would say the outlook for those small guys that are going to be stand alone is going to be very difficult."

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