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Comms chips

Infineon Buys AMDTek for $99.6M

Chipmaker Infineon Technologies AG's (NYSE/Frankfurt: IFX) deal to buy Taiwanese system-on-a-chip manufacturer ADMTek Inc. for €80 million (US$99.6 million) puts the German company firmly on the map as a low-cost supplier of 802.11 chipsets for both the enterprise and consumer markets.

ADMTek is best known -- when it is known at all -- as a supplier of silicon for wired and wireless home gateway products. Infineon's acquisition of the company puts it directly in competition with one of the major players in this market, GlobespanVirata Inc. (Nasdaq: GSPN), which recently merged with Conexant Systems Inc. (Nasdaq: CNXT). (See Conexant, Globespan Merge.)

"Yep, right into the headlights," chuckles Will Strauss, an analyst at Forward Concepts Co.

ADMTek is also a silicon supplier to the enterprise market through its association with Taiwanese wireless LAN access point manufacturer, Accton Technology Corp., which is a major producer of corporate kit that gets rebadged by IT players.

The acquisition of ADMTek should give Infineon all the components it needs to put together complete 802.11 chipsets for enterprise access points, according to Bob Wheeler, an analyst at The Linley Group.

ADMTek, Wheeler notes, already has an access-point chip that included everything but the radio on silicon. Meanwhile, Infineon has been working with Agere Systems Inc. (NYSE: AGR.A) to design a multimode chipset that supports every current 802.11 radio standard (a/b/g). (See Agere, Infineon Team on WLAN.)

"Infineon largely designed the radio," says Wheeler. "I've heard they're very close to shipping product now."

Forward Concept's Strauss notes that working with a Taiwanese manufacturing base may also give Infineon a cost advantage over rivals like Broadcom Corp. (Nasdaq: BRCM) and Texas Instruments Inc. (NYSE: TXN). The company plans to set up a joint venture called Infineon-ADMtek Co. Ltd in Taiwan.

— Dani€l Jones, Sit€ €ditor, Unstrung

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