Intel Re-enters Communications Chipset Business with Infineon Deal

In a move that's one definitely targeting a greater presence in mobile devices, Intel has purchased Infineon Technologies' Wireless Solutions (WLS) business for approximately $1.4 billion. The deal was announced late Sunday night.

Intel - Infineon Deal Expected to Close in Q1 2011

WLS will operate as a standalone business, the companies said. It still requires regulatory approval, but is expected to close in the first quarter of 2011. Earlier this month, Intel said it will acquire security software maker McAfee for $7.68 billion.

Infineon chips and chipsets are used in many devices including laptops and smartphones including, notably, the iPad and iPhone 4. Those who remember the iPhone 3G's many issues when it was first birthed will also recall the name Infineon. Apple used what some called an "immature" Infineon chipset. Apple patched the issue, somewhat, with a firmware update, and since then AT&T has been targeted as the culprit in any iPhone connectivity problems (with the possible exception of the "death grip" fiasco).

WLS accounted for nearly a third of Infineon's €3 billion ($3.83b) revenue last year. The deal comes less than a month after an Aug. 2 Infineon announcement was "in discussions with interested parties about a transaction" involving WLS.

Indeed, many view the future of computing as mobile, and under Otellini, Intel has moved to expand beyond PCs. In fact, on Friday, Intel warned that a slump in PC demand would cause intel Q3 revenue to fall below forecasts. This follows strong Q2s for both Intel and rival AMD, in which Intel reported its "best quarter ever."

With analysts as well noting a fall-off in orders from PC manufacturers, some have downgraded both Intel and AMD. Intel's warning states the company now expects sales in the third quarter tobe in the range of $10.8 billion to $11.2 billion, short of the company's prior estimates of $11.2 to $12 billion.

Notably, in a press release issued Monday, Intel made a bullet point of how the Infineon acquistion will aid in its intention to accelerate LTE (4G), although in the same breath it also noted WiMax. Intel CEO Paul Otellini said that "The global demand for wireless solutions continues to grow at an extraordinary rate. The acquisition of Infineon's WLS 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 from Wi-Fi and 3G to WiMAX and LTE. As more devices compute and connect to the Internet, we are committed to positioning Intel to take advantage of the growth potential in every computing segment, from laptops to handhelds and beyond."

In 2006, Intel sold its communications chips business to Marvell. Thus, with its acquisition of WLS, Intel is basically back where it started.

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