SAN JOSE, Calif. - Intel Corp. plans to purchase Infineon Technologies AG's Wireless Solutions Business (WLS) for $1.4 billion in cash with the deal expected to close in the first quarter of 2011.
This is yet another deal in a buying spree that has seen Intel agree to acquire Texas Instruments Inc.'s cable modem product line, on Aug 16 and willing to spend $7.68 billion on security software vendor McAfee Inc. last week.
In the Intel-Infineon deal, one analyst believes that Infineon exited the wireless chip business--just in time. Today, Infineon's cell-phone chipset is being used in Apple's iPhone and iPad. In those products, Apple is reportedly planning to offer a CDMA version, based on Qualcomm's chipset.
Apple may be even working on its own cell-phone chip sets, according to an analyst.
''I've read the scenarios that the divesture will allow the surviving Infineon Technologies AG to better concentrate on its more profitable automotive and industrial chip business, but I don't think that's the whole story,'' said Will Strauss, president and principal analyst at Forward Concepts Co.
''My theory is that Infineon is aware that Verizon will be fielding a CDMA version of the iPhone rumored to be introduced next January. A CDMA version of iPhone would certainly require an advanced Qualcomm 3G modem, essentially letting the Qualcomm camel 'get its nose under the tent', perhaps displacing some of the Infineon modems destined for future iPhones,'' he said.
''It's unlikely that Intel WLS will see its Apple iPhone socket disappear, but the CDMA segment of the market (viz, Verizon, Sprint, KDDI, etc.) would not be available to Intel's cellphone modems,'' he said. ''If the Qualcomm/Verizon approach proves to be successful, can iPad be far behind, especially with Qualcomm's Gobi modem, allowing the user to select either CDMA or UMTS carriers. Since Qualcomm also is a major supplier of UMTS modems, they could even eat into the main Intel WLS iPhone market.''
For Apple, there is a different scenario. ''Apple's acquisition of PA Semi and its (perhaps unrelated) introduction of the (Samsung-fabricated) A4 processor employed in both iPhone 4 and iPad, indicates that Apple is looking to eventually 'own' its mobile processors. Will being a slave to Intel for both its desktop and mobile processors sit well with Apple. I don't think so. Qualcomm could look very attractive to Mr. Jobs for future mobile planning,'' he added.
I wholeheartedly agree. Infineon is lucky to exit the cell IC market just in time given its impending deal with Intel. Infineonís cell IC ambitions would have surely suffered due to the strained relationship between these two technology giants.
Apple has already signed a deal with Qualcomm for its upcoming CDMA-based iPhone. With Intel scooping up Infineon, it will be interesting to watch the Apple-Infineon relationship business.
Whatever be the case, Infineonís exit from the cell IC market will prove to be a winning move for Intel.
- Keith Schaub
Well the point made is not that CDMA user base is huge. But Once Apple *re-designs* its hardware around a qualcomm chipset for CDMA, What is the point of having a new design for normal 3G/4G when the qualcomm CDMA chip based design can be easily adapted for normal 3G? Most of the qualcomm chipsets have similar interfaces or have integrated 3G support. BTW Qualcomm does have GSM/EDGE support in its 3G chipsets.
I always have a laugh when someone tells me how important the CDMA business is to Apple's iPhone. Give me a break, it's half the US mobile subscriber base. End of story. And, let's face it, 3G continues to rely upon its 2G/2G+ safety net in pretty much every geography. So the notion that Qualcomm will somehow "eat into" the Infineon footprint in iPhone is simply flawed, as Qualcomm doesn't have a competitive GSM/EDGE capability in its 3G handsets.
Spend some time looking at the network icon on your 3G handset. Notice how much it's in 2G/2G+ mode, regardless of Verizon, Sprint, AT&T or T-Mobile. Then tell me Qualcomm is going to hurt Intel's newly-bought iPhone share.
Certainly Apple is key. How much press did Infineon get for its Panasonic sockets? TriQuint got new life with the stock market analysts when it won 3G front end sockets in iPhone.
This opinion is really good and such a critic opinion is important to rethink the strategies for any companies. I do feel Apple will definitely try to enter into the CDMA market since there isn't much left to do for Apple to sell more iphones. But when we compare the market of CDMA with GSM it is definitely much smaller and the future of the mobile technology is already in LTE which can provide mobile broadband experience. I don't think Intel should worry much about Apple because it is not the only customer for Infenion WLS products. Anyone have data for the sales distributions of WLS to different customers?
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