Intel deal signal of intent on smartphone market
US chipmaker Intel, which has a major plant in Leixlip, unveiled a deal yesterday to buy German chipmaker Infineon Technologies' wireless unit for $1.4bn (€1.1bn), as it claws its way into the smartphone market and cuts its reliance on PCs.
The deal is the second major acquisition in two weeks by Intel, which has an eye to a future where telephones, tablets, cars and household appliances are increasingly connected through networks.
Infineon's mobile unit, WLS, makes mobile chips found in Apple's iPhones as well as handsets made by Nokia and LG. Its purchase gives Intel technology in an area where it has struggled.
In a move seen as key to making desktop and mobile chips safer from hackers, Intel said on August 19 that it would pay $7.7bn (€6.1bn) to buy security software maker McAfee, its largest acquisition ever.
Buying WLS raises Intel's stake in the wireless market but companies like Qualcomm and Broadcom are competing fiercely to lead in next-generation chips that enable fast downloads of movies, music and other data.
"Without the deal, Intel was likely at risk of being shut out of this important market," said BMO analyst Ambrish Srivastava in a note to clients. "Now the company has a fighting chance."
Intel has long dominated the market for PC processors. Its Atom mobile chips took the low-cost, no-frills netbook market by storm, but are rarely chosen by manufacturers to be included in smartphones.
And while a shaky economic recovery may make families think twice about upgrading their desktop computers, experts say future growth in the microchip industry lies in mobile devices.
"Computing is spreading to a wide array of connected smart devices, including laptops, cars, smartphones, tablets, smart TVs, and new categories being created almost daily," Intel CEO Paul Otellini told analysts during a conference call.
With deep pockets to fund research and development, Intel said it would speed up Infineon's move into 'Long Term Evolution', or LTE, a high-speed wireless technology that many of the world's biggest operators are planning to use for network upgrades.
Infineon had planned to offer chips for LTE-enabled devices by 2012 but that may be late in the game, with many operators already building LTE networks. (Reuters)