Intel acquires Infineon's Wireless Solutions Business for $1.4 billion

You know Infineon, right? They make those tiny baseband chips inside smartphones (like the iPhone 3G). You know, the chips responsible for communicating with the cell towers on your network. Yes? I’m glad we’re on the same page.

Well, today, Intel bought Infineon’s Wireless Solutions Business — WLS — for $1.4 billion of your American dollars.

Why’d they do it? Well, Intel have been trying to get into the phone CPU market, but are having trouble competing with the likes of Qualcomm and ARM, who are able to offer all the communication options — that is, WiFi, Bluetooth, GSM, 3G, 4G — as well as the CPU/GPU, on a single chip. This makes the chips not only smaller (and therefore easier to fit on a logic board), but also more energy efficient.

So, rather than having to rely on a third party to get all their eggs chips in one basket package, Intel will finally be able to offer a full system-on-a-chip, made by their very own hands.

Such chips would feature not only in the laptops that Intel are famous for, but also in tablets, netbooks, and smartphones.

Intel mention in the press release (below) that WLS will continue to operate as a standalone business, and — most importantly — will continue to support ARM devices.

The deal will likely close in the first quarter of 2011, and will also help Intel “accelerate LTE”.

For the detail obsessed, the full press release is below:

Intel to Acquire Infineon’s Wireless Solutions Business

Neubiberg, Germany and Santa Clara, Calif., Aug. 30, 2010, CEST (Aug. 29, U.S. PDT) – Infineon Technologies AG and Intel Corporation have entered into a definitive agreement to transfer Infineon’s Wireless Solutions (WLS) business to Intel in a cash transaction valued at approximately $1.4 billion.

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.