News: Intel acquires iPhone chipmaker Infineon’s wireless unit for US$1.4Billion

Tuesday, August 31st, 2010 at 8:51 AM

Intel Corp., the world’s largest chipmaker, agreed to buy Infineon’s Wireless Solutions (WLS) business for about $1.4 billion, gaining a foothold in the mobile- phone business it has struggled to crack for more than a decade. A definitive agreement to transfer Infineon’s Wireless Solutions (WLS) business to Intel has been entered in a cash transaction valued at approximately $1.4 billion.

Infineon, Europe’s second-biggest semiconductor maker, expects the all-cash transaction to close in the first quarter of 2011, according to a statement today. The business makes third-generation, or 3G, chips for devices like Apple Inc.’s iPhone and Samsung Electronics Co.’s Galaxy S.

WLS, a leading provider of cellular platforms to top tier global phone makers, will operate as a standalone business serving its existing customers. WLS will also contribute to Intel’s strategy to make connected computing ubiquitous from smartphones to laptops to embedded computing.

“The global demand for wireless solutions continues to grow at an extraordinary rate,” said Paul Otellini, Intel president and CEO. “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.”

“The sale of WLS is a strategic decision to enhance Infineon’s value. We can now fully concentrate our resources towards strong growth in our core segments Automotive (ATV), Industrial & Multimarket (IMM) and Chip Card & Security (CCS). This creates a great perspective for all Infineon customers, employees and shareholders,” said Peter Bauer, CEO of Infineon Technologies AG. “We all stand to benefit enormously from this deal. Thanks to the outstanding effort of the employees and the management during the last years, WLS is excellently positioned to grow further with the new owner who is ideally suited for this business.”

The WLS transaction is a strategic decision for Intel and Infineon. WLS complements Intel’s existing assets and enables growth in mobile computing, smartphones and embedded computing. Infineon will benefit from this by stronger addressing three central challenges to modern society – energy efficiency, mobility and security.

Intel’s goal is to expand its mobile and embedded product offerings to support additional customers and market segments, including smartphones, tablets, netbooks, notebooks and embedded computing devices. Through this effort, Intel will pair WLS’ best-in-class cellular technology with its core strengths to enable the delivery of low-power, Intel-based platforms that combine its applications processor with an expanded portfolio of wireless options — bringing together Intel’s leadership in Wi-Fi and WiMAX with WLS’ leadership in 2G and 3G, and a combined path to accelerate 4G LTE.

Intel expects WLS to continue growing, and remaining a standalone business to ensure continuity of existing customer sales, projects and support. The business will continue to support its customers with the best solutions possible, including ARM-based products as well as Intel-based application processor platforms with leading-edge 3G slim modem solutions.

WLS today holds leading positions in the field of wireless mobility and cellular platforms for smart phones and ultra-low-cost, entry phones. WLS provides baseband processors, radio-frequency transceivers, power management integrated circuits (ICs), additional connectivity features, single-chip solutions as well as the corresponding system software. This helps to enable the smooth transmission of voice and high-speed data from the backbone of the telecommunication network to the end user’s device. With annual revenue of Euro 917 million, WLS was approximately 30 percent of Infineon’s total annual revenue of Euro 3.03 billion in the past financial year.

The board of directors of Intel and the supervisory board and the management board of Infineon have approved the transaction. It is expected to close in the first quarter of 2011, subject to certain regulatory approvals and other customary closing conditions specified in the definitive agreement.

i personally think this is a good deal for both companies as Intel will be able to strengthen its position in the fast-growing smartphone market which they have very little share in. On the other hand, Infineon will be able to sell its wireless unit at a time when the more cyclical business is running successfully. The transaction price is fair and is in line with expectations according to industry experts.

The acquisition follows Intel’s $7.68 billion purchase of security software maker McAfee Inc., and fits a plan by Chief Executive Officer Paul Otellini to lessen the company’s reliance on the personal-computer market. Intel, based in Santa Clara, California, wants to get its processors into smartphones like the iPhone and could use the business to beef up the wireless features of PCs.

Below are the highlights of the deal as published in Intel’s Press room:-

NEWS HIGHLIGHTS

Intel to purchase Infineon’s Wireless Solutions Business, called WLS, in a cash transaction valued at approximately $1.4 billion. The deal is expected to close in the first quarter of 2011.
WLS sale enables Infineon to expand leading position in markets for automotive, industry and security technologies.
WLS will operate as a standalone business. Intel is committed to serving WLS’ existing customers, including support for ARM-based platforms.
The acquisition expands Intel’s current Wi-Fi and 4G WiMAX offerings to include Infineon’s 3G capabilities and supports Intel’s plans to accelerate LTE. The acquired technology will be used in Intel® Core processor-based laptops, and myriad of Intel® Atom™ processor-based devices, including smartphones, netbooks, tablets and embedded computers.
The deal aligns with Internet connectivity pillar of Intel’s computing strategy.

So, are we going to see the “Intel Inside Logo” on iPhones soon???…… :-)