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Intel to acquire wireless chipmaker for $1.4bn

The Third Pillar: Infineon

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Intel today announced an acquisition targeted at beefing up their stuttering efforts to become a player in the hottest segment of the consumer-electronics market: smartphones and other mobile internet-connectivity devices.

"The global demand for wireless solutions continues to grow at an extraordinary rate," said Intel president and CEO Paul Otellini in a prepared statement detailing the reasoning behind the $1.4 acquisition of the Wireless Solutions Business (WLS) of Infineon Technologies AG, headquartered in Neubiberg, a suburb of Munich, Germany.

"The acquisition of Infineon's WLS business strengthens the second pillar of our computing strategy — Internet connectivity," he continued, "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."

The pillars to which Otellini referred were defined in a webcast on August 19 when Chipzilla gobbled up security firm McAfee. "We have concluded that security has now become the third pillar of computing," he said at the time, "joining energy-efficient performance and Internet connectivity in importance."

Intel has been focused in recent years on the "energy-efficient performance" pillar, and is now spending nearly $9.1bn on the other two: $7.68bn for McAfee and now $1.4bn for Infineon WLS — the latter acquisition having been rumored earlier this month.

Infineon is not merely the architect of that internet-connectivity pillar. In addition to its wireless communications business, it also supplies chip-card ICs and embedded chips for the industrial and automotive markets. According to The Wall Street Journal, Infineon has the third largest market share in wireless chippery, behind number-one Qualcomm and number-two Texas Instruments.

For its most recent fiscal quarter, Infineon reported total revenues of €1.2bn ($1.5bn, £848m). Of that, WLS contributed the second-largest amount, €346, or 29 per cent of the total, behind industrial at €373 and edging out automotive's €333m.

Don't immediately jump to the conclusion that the acquisition of Infineon WLS portends the end of Intel's ultra-mobile processor development. As The Reg reported earlier this month, although Infineon does have an ARM license, it uses ARM's security IP not in its WLS business, but in products developed for its other divisions.

In their announcement, Intel said it was acquiring Infineon WLS because of that that division's "baseband processors, radio-frequency transceivers, power management integrated circuits (ICs), additional connectivity features, [and] single-chip solutions as well as the corresponding system software." Intel says that Infineon WLS will continue to operate as a "standalone business".

Intel did not immediately respond to our questions about how the acquisition of Infineon WLS will affect the development, customer targeting, and roadmap of its still-gestating Atom-based Medfield mobile platform, set for next year. Medfield will be the follow-on to Chipzilla's Moorestown platform, which it unveiled this May.

At that unveiling, Anand Chandrasekher, head of Intel's Ultra Mobility Group, said of Moorestown's targeting of the smartphone market: "It's really our first foot in the door." Intel hopes to step through that door with Medfield — and the Infineon WLS acquisition appears to be an effort to help wedge that door open by offering more-complete smartphone platforms.

The smartphone market, however, is dominated by the ARM architecture. Despite Intel's muscle, it remains to be seen if its x86 architecture can make a dent in that dominance — though the company's promise to port the Android mobile operating system to x86 should help.

After the acquisition was announced, Infineon Technologies AG closed down 3.7 per cent. At this writing, Intel is down 1.9 per cent in a market that's down 0.7 per cent overall. ®

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