Repeatedly leaked in advance and therefore fully expected, Intel and Infineon have agreed that the world's largest chip company should acquire the wireless business unit of Infineon for about $1.4 billion in cash.
As a result Intel becomes a supplier of wireless transceivers to numerous cell phone makers and into Apple's highly successful iPhone and iPad products. And Infineon becomes 30 percent smaller than it was, arguing that this allows it to focus on automotive and industrial applications.
My view is that this deal that gives a Intel a $1.4 billion ticket to bet on itself in the convergence of communications and personal computing Ė but no guarantee of success. And it gives Infineon a cash booster but is perilous for the company Ė as one executive's restructuring can be another's deconstruction by a thousand cuts.
Turning to Intel: the key piece of evidence is that the company has shown itself poor at competing in any other major sector except PCs.
Or, put another way, Intel's heavy-handed dominance of the systems companies in the PC sector in the 1980s and 1990s, helped make up the minds of a lot of communications OEMs not to deal with Intel. This is Intel's second major tilt at the communications market place but there is not clear reason why the company should be any more successful this time around.
Readers may remember that Intel launched itself at the handset market in the middle part of the decade using an applications processor based on an ARM architectural license. Intel found getting traction with customers outside the U.S. difficult and ended up selling the business to Marvell Technology Group Ltd. in 2006 (see Marvell buys Intel's handheld processor unit for $600 million).