Intel Looks to Infineon for the Full SOC

In a move that makes more immediate sense than purchasing a software-security company , Intel Corp. (Nasdaq: INTC) announced today it would acquire the Wireless Solutions (WLS) business of Infineon Technologies AG (NYSE/Frankfurt: IFX) for approximately $1.4 billion in cash. (See Intel to Acquire Infineon's Wireless Biz.)

Rumors that Infineon was shopping its wireless business have persisted for months. The company let on it was making progress in the search earlier this month, hyping its market leadership in smartphones and ultra-low-cost entry phones for which it provides baseband processors, radio-frequency transceivers, complete single-chip solutions, and the corresponding system software. (See Infineon in Talks to Sell Wireless Biz and Infineon Sells Its Wireline Business.)

Intel's acquisition of these assets will contribute to its strategy "to make connected computing ubiquitous from smartphones to laptops to embedded computing," the company said.

That strategy gets tweaked every now and again. In 2006, Intel exited wireless, selling its cellphone processor business to Marvell Technology Group Ltd. (Nasdaq: MRVL). (See Marvell Takes a Bit of Intel.)

Infineon provides the connectivity aspect, but the complete system-on-a-chip (SOC) is what Intel is eyeing, because it faces stiff competition in the smartphone market. It may be the world's largest chipmaker, but in the phone CPU market, it is up against Qualcomm Inc. (Nasdaq: QCOM) and ARM Ltd. , which both supply chips that combine network technologies. (See Qualcomm Adds Support to Chipsets.)

Intel president and CEO Paul Otellini said in a statement that Intel will use WLS to target the full range of wireless options from WiFi and 3G to WiMax and LTE, but the focus is on combining all these technologies onto one chip. Infineon's strong suits include mobility, security, and energy efficiency, which would be helpful in building an SOC.

Intel has been making some smartphone inroads. It is beginning to push MeeGo, the combination of its Moblin Linux OS and Nokia Corp. (NYSE: NOK)'s Maemo platform, into mobile devices, and it will reportedly introduce a smartphone-focused chip, dubbed Medfield, early next year. The chip will use Intel's 32nm manufacturing technology and focus on driving down size and power requirements. (See The OS Outlook .)

Outside of smartphones, Intel says it will focus on tablets, netbooks, notebooks, and embedded computing devices.

Germany-based Infineon is responsible for the baseband chips in Apple Inc. (Nasdaq: AAPL)'s iPhone 4 and iPad, including a GSM/W-CDMA transceiver and baseband processor, according to UBM TechInsights. It also powers the 3G connectivity in phones from BlackBerry , LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , Samsung Corp. , Nokia, and others. (See Infineon & Nokia Team Up for LTE Chips and Infineon Intros LTE, 3G Chips.)

Infineon's WLS business brought in €917 million ($1.13 billion) in revenues, or 30 percent of the company's total, in the year leading up to Sept. 30.

Intel's acquisition is slated to close in the first quarter of 2011, and WLS will continue to operate as a standalone business and serve its current customers.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

metro_dave 12/5/2012 | 4:25:14 PM
re: Intel Looks to Infineon for the Full SOC

Whilst it seems logical for Intel to expand its presence in mobile handsets I have a few open questions

1/ Why is Infineon divesting of 30% of its revenue? Some possibilities come to mind like low margin or the need to make significant investment to keep/grow market share. Of course it could be that with Siemens mobile phones (BENQ) closed they feel its better to focus on the remaining local (and world leading) automotive/industrial markets. Any opinions?

2/Intels record of buying/integrating communications companies is less than stellar, so it was interresting to note the company will operate as a seperate entity.  I guess that the Infineon chips are currently made at non Intel foundries. Does Intel plan to transfer the baseband products to its own foundries?

3/For once I don't think Intel has the luxury of not perfoming on the integration of its purchases, in the past it was about faster growth (e.g. optical) but now with the rise of smartPhones, ebooks and Tablets it seems more about maintaining revenue. Any opinions?

DevilsRejection 12/5/2012 | 4:25:14 PM
re: Intel Looks to Infineon for the Full SOC

All Intel is getting is the assets to build the wireless modems. Intel will take Infineon's modems and slap them next to their Atom IP and sell it as a SoC similar to how Qualcomm does with their Snapdragon platform that offers an ARM v7 compatible application processor, GPU, 3.5G modem, GPS, WiFi, etc.

Pete Baldwin 12/5/2012 | 4:25:12 PM
re: Intel Looks to Infineon for the Full SOC

Hi metro_dave -- Here's how I'd fill in the answers, although they're not definitive by any means....

1) Infineon  has wanted to slim down to the automotive market for some time, so I wouldn't say the deal has any darker implications than what's already known. Low margins would certainly be one factor.

2) I doubt it, but I have to admit I haven't had a chance to ask specifically. As for the "less than stellar" part - i'll be writing something soon about that.

3) If you're thinking about smartphones and tablets ultimately becoming PC replacements, then yes, you could consider this to be about replacing revenue. Or you could consider Intel to be playing catch-up -- it should have cemented its place in communications years ago.

FredStein 12/5/2012 | 4:25:02 PM
re: Intel Looks to Infineon for the Full SOC

Is Nokia the primary target? More specifically Meego and Symbian?

It seems ARM as well as the Mobile OS's leave Intel compromised. And Nokia needs to change the game now that iOS and Android are on the move.

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