Intel snaps up Infineon’s wireless arm

Steve Dinneen
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Intel is to buy German chipmaker Infineon’s wireless unit for $1.4bn (£900m) as it seeks to claw its way into the booming smartphone market and reduce its reliance on PCs.

The move, agreed yesterday, is the second major deal for Intel in two weeks. The company has already announced a $7.7bn deal for security software firm McAfee.

The deal is designed to help the world’s biggest chipmaker break into the rapidly expanding smartphone market. It is desperate for a foothold after selling its chip business for mobile handhelds and mobile phones to Marvell Technology for $600m four years ago.

Intel dominates the market for PC microprocessors and its Atom mobile chips took the low-cost, no-frills netbook market by storm.

However, pressure from tablet computers such as Apple’s iPad is chipping away at demand for notebooks and PCs.

Intel plans to keep Infineon’s mobile unit independent once the all-cash transaction closes in the first quarter of 2011.

Arvind Sodhani, executive vice president of Intel, said: “We have learned from our experience over the past 20 years that many of our previous acquisitions have not been as successful as we would have liked them to be, that’s why we are keeping this entity independent.”

Infineon, based near Munich, supplies chips to companies such as Nokia, LG and Apple. The sale of its wireless arm could open the door on a special dividend for shareholders, who have not seen a payout in years.