John Paczkowski

Recent Posts by John Paczkowski

Infineon Inside (Intel)

It took a few days longer than expected, but Intel (INTC) has agreed to purchase Infineon’s wireless division. Under the terms of a deal announced early this rnorning, Intel will pay approximately $1.4 billion for the unit, which accounted for nearly a third of Infineon’s revenue last year.

“The acquisition of Infineon’s wireless business strengthens the second pillar of our computing strategy—Internet connectivity—and enables us to offer a portfolio of products that covers the full range of wireless options,” Intel CEO Paul Otellini said in a statement.

Expected to close in early 2011, the deal will see Intel operate Infineon’s Wireless Solutions group as a stand-alone company and continuing to support existing customers, including those including those who use ARM chips. It gives Intel a strong foothold in the market for smartphone chips, netting it a customer list that includes the likes of Research in Motion (RIMM), Samsung, Nokia (NOK) and Apple (AAPL) and — according to Infineon’s annual report, a 5.9 percent share of the wireless chip market. Said IDC analyst Flint Pulskamp, “Infineon would make Intel an instant heavyweight (in the mobile space) and buy them three, four years in R&D.”

The irony, of course, is that Intel was in something close to this position four years ago, but gave it up by selling off its mobile chip business to Marvell. As Intel VP Sean Maloney said at the time, “In recent years, Intel has made significant progress and won major customers with this business. The communications and application processor segments continue to present an attractive market opportunity, and we believe this business and its assets are an optimal fit for Marvell.”