Infineon set to focus on capacity before acquisitions

LONDON – Infineon Technologies AG, which is selling its wireless business unit to Intel Corp., is planning to use the cash it will receive to re-invigorate its in-house manufacturing ahead of seeking growth through acquisitions. That will include the expansion of manufacturing in Asia, the company said.

Speaking during a press conference held to discuss Intel's acquisition of the Infineon wireless business for approximately $1.4 billion, Peter Bauer, Infineon chief executive officer, indicated that supporting organic growth through expanding manufacturing capacity is a priority.

Bauer said that whereas the wireless business unit, due to become part of Intel in the first quarter of 2011, was heavily dependent on foundries to get its chips made, the remaining parts of Infineon – operating in the automotive, industrial and security sectors – are based strongly on manufacturing within Infineon factories. "And with double-digit growth this means investments; investments in factories and in the further expansion of capacities." he said.

Bauer said that Infineon would be upgrading to 300-mm wafer production for its manufacturing processes on top of the capacity expansion as that means a jump in productivity. While Bauer said that the $1.4 billion coming from Intel would not be spent in the next 12 months, he said that he did expect to spend hundreds of millions without specifying whether that would be in euros or dollars. He added: "We expect that in the next three years we will expand our manufacturing in Asia strongly to service our growth."

Reinhard Ploss, executive vice president and head of operations at Infineon, said that the company would be rapidly moving to 300-mm wafer production as well as introducing specialist processes such as silicon-carbide and gallium-nitride. For standard CMOS Ploss indicated Infineon would still use foundries but when CMOS is integrated with other technologies the company would use in-house manufacturing.

Bauer added that with the cash resulting from the sale of the wireless business Infineon would enjoy "room for maneuver." But as he turned to the possibility of growth through acquisition Bauer said: "We only want to spend money if and when this can contribute to an enhancement of Infineon's value. You can't have this at the push of a button."

Bauer said that the sale of the wireless business unit would mark a major change for Infineon which would need to establish a new strategy.

"Do we rule out further acquisitions? Well, I can tell you the portfolio we have after this sale of wireless will be strongly networked and interconnected synergistically." He continued: "There is synergy across the board and the portfolio that we have now is based on clear cut core competencies of Infineon's and growth strategies and I don't see any requirement for adaptation."

Related links and articles:

Analysis: Intel's wireless move no guarantee of success

Intel will run wireless as separate business

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