Intel agrees to buy Infineon’s communications chip business for $1.4B

Intel has agreed to purchase Infineon’s mobile chip business for $1.4 billion, the companies said late Sunday.

The move by the world’s largest chip maker will help boost the company’s presence in smartphones, which have begun to dominate the computing landscape. Rumors of the deal have been around for a while.

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“The global demand for wireless solutions continues to grow at an extraordinary rate,” Intel chief executive Paul Otellini said in a statement. “The acquisition of Infineon’s WLS (Wireless Solutions) 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.”

Otellini said that the full spectrum of wireless technology includes Wi-Fi wireless networking, 3G data networks over cell phones, WiMax long-range wireless networking, and Long-Term Evolution, the next-generation of wireless phone networking, also known as 4G.

Infineon ranked fourth in cellular-baseband shipments last year with an 11 percent unit share, according to a recent report from market analyst firm The Linley Group. Infineon Technologies’ wireless solutions division supplies components to Apple, Nokia, Samsung and others.

Intel wants to expand its presence in products such as smartphones, tablet computers, netbooks, laptops and embedded computing devices. Clearly, this acquisition makes a lot more sense than Intel’s purchase of McAfee, the antivirus software company, for $7.68 billion earlier this month. It looks like Intel is getting serious about competing with mobile chip vendors, ranging from applications chip makers such as Marvell to intellectual property companies such as ARM.

The boards of the two companies have approved the deal, which will close in the first quarter of 2011.

Front page photo credit: Emilian Robert Vicol