Intel’s $1.4 billion Infineon mobile chips purchase: 2G, 3G, LTE & WiMAX

If the eagerness of Intel to grab a huge share of the mobile chip market was still in any doubt, let it be put to rest today. Intel has just announced a $1.4 billion buy-out of WLS – the wireless chip business of semiconductor manufacturer Infineon. Along with acquiring WLS’s client list, Intel intends to use the acquisition to boost its own properties in 4G and 3G wireless chips.

What’s the story?

It was announced back in June that Infineon was trying to sell off its underperforming WLS branch – and immediately rumors arose stating that Intel were looking into it. Intel has been pushing hard into the mobile chip market with it’s Atom line of processors, trying to carve a foothold in a market that is predominantly held by rival chip-maker ARM. Intel has today announced that it will be purchasing the entire company in an approx. $1.4 billion cash transaction – expected to close in Q1 next year.

The primary interest in WLS for Intel is that it can use the company’s expertise to further its own goals in mobile devices (smartphones) and embedded devices (in-car computers). Intel claims that Infineon technology will be used to boost its entire portfolio of wireless processors, including smartphones, tablets, netbooks and notebooks.

Of interest to many observers is that Infineon is an ARM licensee. Intel developed the Atom series so that (amongst other things) it would no longer have to pay ARM to create chips. Intel claims that WLS will be run as a stand-alone business, and will be able to maintain it’s old client list – which would require ARM support, and therefore ARM licenses. But as was asked back in July, why would Intel spend so much money developing Atom just to become an ARM-licensee all over again?

What we think?

Intel has a long, uphill battle in this market. For a long time, the standard chipset we’ve been seeing in high-end smartphones have been from Qualcomm’s Snapdragon family of processors – which are all based around an ARM CPU. Intel has been making some big moves, like today’s purchase and the announcement earlier this year that Intel and Nokia were merging their mobile OSs into Meego. It has yet to be seen if these tactics will pay off in the long run. Intel does have a chipset deal in place with Nokia, the Biggest Mobile Company in the World ™ – but Nokia doesn’t have the sexiest smartphone portfolio (certainly not compared to Apple and Google). One major effect this purchase will have to is to expand the number of technologies that Intel can take adventage of. It has made serious investments in LTE and WiMAX, at the expense of existing 2G and 3G technologies. WLS will add a much stronger capability for those older systems to Intel.