Intel will acquire Infineon Technologies' wireless division for $1.4 billion, the company said on Monday.
The acquisition of Infineon's wireless division could help Intel grow faster in the high-volume smartphone market, where the company has minimal presence. Most smartphones today carry chips designed by rival Arm, and Intel has had its eye on the smartphone market as the volume of chips for mobile devices outpaces traditional CPUs that go into PCs.
Intel earlier this year released low-power Atom chips for high-end smartphones and tablets, and next year is expected to release new Atom chips for wireless handsets that are more power efficient. Most Atom chips today go into netbooks, and Intel until now has struggled to snag customers to use Atom chips in smartphones.
The acquisition will also net Intel some of the world's top smartphone makers as customers. Infineon's Wireless Solutions division makes 3G chips and baseband processors that are used in smartphones like Apple's iPhone and Samsung's Galaxy S, and tablets like the iPad.
Infineon was originally formed when Siemens spun off its semiconductor division in 1999.
Infineon earlier said it was in discussions with interested parties about a "transaction" concerning the company's Wireless Solutions division. The division represents approximately 30 percent to Infineon's total annual revenue of €917 million from the past financial year. For the current third fiscal quarter of 2010 ending June 30, revenue for the Wireless Solutions division grew 38 percent year-over-year to €346 million, representing 29 percent of the company's total quarterly revenue.
Companies including Samsung and Broadcom were rumoured to be in talks with Infineon to acquire the division.
The announcement that Intel will acquire Infineon's wireless division nmarks the second major acquisition by the company in less than two weeks, following the chip maker's $7.7 billion deal to acquire McAfee.