Intel Corp. (Nasdaq: INTC)’s acquisition of Infineon Technologies AG (NYSE/Frankfurt: IFX)’s Wireless Solutions business was a long time coming, but while some have interpreted the move as Intel's strategic shift from WiMax to Long Term Evolution (LTE), one industry analyst says the deal isn't about 4G at all. (See Intel Looks to Infineon for the Full SOC.)

Intel acquired Infineon to compete in 3G and 3.5G, or HSPA+, and that’s where its immediate technology focus must be to compete in the smarpthone space, says Heavy Reading analyst Berge Ayvazian.

“This acquisition is designed to position Intel in the much larger 3G and 3G+ mobile broadband market, where it has so far missed the boat,” Ayvazian says. (See How Intel Can Avoid Botching Infineon.)

If Intel was focused only on positioning itself for LTE, then the chipmaker would have been better off buying a smaller niche player like Sequans Communications or Beceem Communications Inc. that can bridge the WiMax and LTE markets, Ayvazian adds.

The 3G market, of course, has been hot for a while, and Intel is more than a little late to the party. Ayvazian says the Infineon deal has been in the works for a long time and Intel’s potential partner pool was also limited. Most ODM relationships are well established, which has left Intel out of the 3G equation.

Now with the Infineon wireless acquisition, Intel will have an entry into the 3G, and eventually LTE, arenas as well as a built-in partner base. That base includes important player Apple Inc. (Nasdaq: AAPL), an account Intel would be wise not to lose.

Intel has been grappling with downsizing its Atom netbook chips to mobile devices instead of building for mobile devices from the ground-up. That will be a hard handicap to overcome unless it leans heavily on Infineon.

“Intel is admitting that up until now they were unable to organically get to a competitive position in the mobile space with the chipset projection they were on until now,” Ayvazian says.

So the Infineon deal represents a fresh start in mobile devices for Intel. And the opportunity the company will exploit is in HSPA+, the technology that T-Mobile US Inc. and AT&T Inc. (NYSE: T) are banking on prior to their move to LTE.

The Infineon acquisition also gives Intel a path to 4G. Infineon and Qualcomm Inc. (Nasdaq: QCOM) are among the few chip vendors that have a 3G radio that is also capable of 4G. So even as both vendors focus on 3G, they have a built-in evolution path to 4G.

Intel was careful not to play technology favorites in its release, noting that the acquisition strengthens its “portfolio of products that covers the full range of wireless options from WiFi and 3G to WiMAX and LTE,” although accelerating LTE development will have been an important factor in the acquisition.

Intel isn’t giving up on WiMax, although its ambitions are only to keep the technology in play rather than drive it to the mainstream, Ayvazian adds. Intel’s goal is to support as many wireless technologies as it can, but it will have to strike a balance or it will be out of the wireless game before it even gets started.

“On the other hand, you can overstock these things,” Ayvazian says. “There is only so much a chip can do.”

— Sarah Reedy, Senior Reporter, Light Reading Mobile