Report: Intel, Infineon In Acquisition Talks

On Thursday, Bloomberg reported that Intel and Infineon are close to a deal and that an announcement could come as early as this week. Infineon, which makes the mobile processors that run Apple's iPhone, is reportedly asking $ 1.91 billion for its wireless business, according to Bloomberg, which quoted sources familiar with the talks.

Although Intel's acquisition of McAfee has baffled some analysts, its purchase of Infineon's wireless business would be much less of a surprise. Intel is looking to raise its profile in the mobility market and is positioning McAfee as part of a strategy to offer protection that goes beyond the PC.

Josh Liberman, president of Net Sciences, an Albuquerque, N.M.-based solution provider, says that after the McAfee deal, he expected Intel to pursue an acquisition of a different kind. After all, since McAfee is not involved with any Intel products directly, integrating the security design into its chip architecture is something that will take some time to achieve, he said.

Intel's interest in Infineon could show its desire to purchase intellectual property that might be useful in the future of Intel's own Atom roadmap, according to Liberman.

"Intel is a magnet for litigation all over the world," Liberman said. "Maybe it would actually be cheaper to buy Infineon and its portfolio of patents than it would be to deal with after-the-fact litigation if Atom is headed in the same direction."

Intel may also want Infineon to go along with its data and SSD technology, so as to ensure its current dominance and "make classic devices a reality," Liberman said. For example, mobile Internet devices (MIDs), which Intel envisions as something between a netbook and an iPad, could once again be in the works.

"This would be quite a coup for Intel. This all seems very well-related," said Liberman.

Acquiring Infineon would fit with Intel's strategy of acquiring companies and ambitiously integrating their products and services, says Gordon Scobel, CEO of Qualitech, a solution provider in Bingham Farms, Mich.

"Intel is an aggressive company," Scobel said. "Acquiring the technology and the patents from an existing company is easier than starting from scratch."

Still, the world's leading chipmaker's aggressive push into new territory with McAfee has been met with much surprise, as well as speculation.

Tim Ulmen, principal at Midwest IT solutions group, notices first and foremost the amount of money Intel spent to acquire McAfee, which amounted to a 60 percent premium. For Ulmen, a company like Intel has the capability and technology to develop its own infrastructure, but instead chooses "to just buy one of the players."

Having purchased McAfee and now Infineon, Intel is "coming in the back door with a very key player", Ulmen said.

Intel may not be the only company that has its eye on Infineon. Given that Infineon is Apple's sole supplier for cellular baseboards, there has been some speculation that Apple itself could be interested in buying their partner.

Asked if he believed Intel's move had anything to do with Apple, Ulmen responded unequivocally. "Absolutely, it's related to the circuitry of the iPhone," he said. "There's more hacking now, more mobile devices. It's the total package."